THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Universal Technologies Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was affected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

UNIVERSAL TECHNOLOGIES HOLDINGS LIMITED 環球實業科技控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1026)

EXEMPTED CONNECTED TRANSACTION AND VERY SUBSTANTIAL DISPOSAL IN RELATION TO THE DISPOSAL OF 51% OF THE ISSUED SHARE CAPITAL OF INTERNATIONAL PAYMENT SOLUTIONS HOLDINGS LIMITED

AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

Financial Adviser to the Company

==> picture [65 x 48] intentionally omitted <==

Terms used in this cover shall have the same meanings as defined in this circular.

A letter from the Board is set out on pages 6 to 18 of this circular.

A notice convening the EGM to be held at Room A & B2, 11th Floor, Guangdong Investment Tower, No. 148 Connaught Road Central, Sheung Wan, Hong Kong on Friday, 16 December 2016 at 11:00 a.m. is set out on pages EGM-1 to EGM-2 of this circular. Whether or not you are able to attend the EGM in person, please complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar and transfer office in Hong Kong, Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the EGM or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or at any adjourned meeting thereof if you so wish and, in such event, the relevant form of proxy shall be deemed to be revoked.

30 November 2016

CONTENT

			Page
Definitions . .	. .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the		Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Appendix I	–	Financial Information of the Group . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II	–	Financial Information of the Target Group . . . . . . . . . . . . . . .	II-1
Appendix III	–	Unaudited Pro Forma Financial Information of
		the Remaining Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV	–	Valuation Report on the Target Group . . . . . . . . . . . . . . . . . .	IV-1
Appendix V	–	General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1
Notice of EGM		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

– i –

DEFINITIONS

In this circular, unless the context otherwise requires, the following terms or expressions shall have the meanings set out below:

“Advances” all the liabilities (including loans, advances, prepayments and inter-company accounts) owed by relevant members of the Remaining Group to relevant members of the Target Group as at the Completion Date
“associate(s)” having the meaning ascribed to it in the Listing Rules
“Announcement” the announcement of the Company dated 2 November 2016 relating to the Disposal
“Board” the board of Directors
“Business Day” a day (excluding Saturday, Sunday, public holiday and any day on which a tropical cyclone warning no. 8 or above is hoisted or remains hoisted between 9:00 a.m. and 5:00 p.m. and is not lowered at or before 5:00 p.m. or on which a “black” rainstorm warning is hoisted or remains in effect between 9:00 a.m. and 5:00 p.m. and is not discontinued at or before 5:00 p.m.) on which licensed banks in Hong Kong are generally open for business throughout their normal business hours
“Company”
“Completion”
Universal Technologies Holdings Limited, a company incorporated in the Cayman Islands with limited liability whose issued Shares are listed on the main board of the Stock Exchange (stock code: 1026) completion of the Disposal in accordance with the terms and conditions of the Sale and Purchase Agreement
“Completion Date”
a day falling within the period commencing on the first Business Day and on the tenth Business Day after the satisfaction of the Condition, or any other date as may be agreed by the Parties in writing prior to Completion
“Condition”
the condition precedent for the Completion, as set out in the paragraph headed “Condition Precedent” of this circular
“connected person(s)” having the meaning ascribed to it in the Listing Rules
“Consideration”
the consideration of HK$158.0 million payable by the Purchaser to the Vendor in respect of the Disposal

– 1 –

DEFINITIONS

“Director(s)” director(s) of the Company from time to time “Disposal” disposal of the Sale Shares by the Vendor to the Purchaser and the simultaneous assignment of the Net Shareholders Loans by the relevant members of the Remaining Group to the Purchaser (or its nominees) in accordance with the terms and conditions of the Sale and Purchase Agreement
“EGM” the extraordinary general meeting of the Company to be convened and held at Room A & B2, 11th Floor, Guangdong Investment Tower, No. 148 Connaught Road Central, Sheung Wan, Hong Kong on Friday, 16 December 2016 at 11:00 a.m. for the Shareholders to consider and, if thought fit, approve the Sale and Purchase Agreement and the transactions contemplated thereunder
“Encumbrances” any claim, charge, mortgage, security, lien, option, equity, power of sale, hypothecation or other third party rights, retention of title, right of pre-emption, right of first refusal or security interest of any kind
“Group” the Company and its subsidiaries
“H&R” H and R Group Limited, a company incorporated in the British Virgin Islands with limited liability, a 50% owned entity of the Purchaser and the 49% shareholder of the Target Company as at the date of the Sale and Purchase Agreement
“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the PRC
“Independent Valuer” Graval Consulting Limited, an independent professional valuer
“Latest Practicable Date” 25 November 2016, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular
“Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange
“Long Stop Date” the date by which the Condition shall be satisfied with the Vendor’s reasonable endeavours, being 31 December 2016, or such later date as agreed by the Parties in writing

– 2 –

DEFINITIONS

“Net Shareholders Loans”	the net amount of the	Shareholders Loans after	Shareholders Loans after	the
	set-off of the relevant Advances against the		relevant
	Shareholders Loans
“Parties”	collectively, the Vendor	and the Purchaser,	and	a
	“Party” shall mean either	of them
“PRC”	the People’s Republic of	China, and for the purpose		of
	this circular, excluding	Hong Kong, Macau	Special
	Administrative Region of	the PRC and Taiwan

“Previous Disposal Agreement” the sale and purchase agreement dated 29 October 2014 entered into between the Vendor and H&R in relation to, among other things, the disposal by the Vendor of 49% of the issued share capital of the Target Company
“Purchaser” Brilliant Dragon Investment Limited, a company incorporated in the British Virgin Islands with limited liability, the purchaser of the Sale and Purchase Agreement and a 50% shareholder of H&R
“Remaining Group” collectively, all the companies under the Group excluding the Target Group
“Sale and Purchase Agreement” the conditional sale and purchase agreement dated 2 November 2016 entered into between the Vendor and the Purchaser in relation to the sale and purchase of the Sale Shares and the simultaneous assignment of the Net Shareholders Loans
“Sale Shares” 49,908,600 ordinary shares in the issued share capital of the Target Company, representing 51% of the issued share capital of the Target Company
“Share(s)” ordinary share(s) of HK$0.01 each in the issued share capital of the Company
“SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

“Shareholder(s)” holder(s) of the Share(s) “Shareholders Loans” all the liabilities (including loans, advances, prepayments and inter-company accounts) owed by relevant members of the Target Group to relevant members of the Remaining Group as at the Completion Date

– 3 –

DEFINITIONS

“Stock Exchange”
The Stock Exchange of Hong Kong Limited
“subsidiaries”
include (a) companies or business undertakings which fall under the definition of “subsidiary” in the Companies Ordinance (Cap 622) of Hong Kong; and (b) companies whose financial results and economic benefit are effectively captured under a VIE (variable interest entity), management or operative contracts or any other similar structures, and a “subsidiary” shall be construed accordingly
“Target Company” International Payment Solutions Holdings Limited （環球國際支付控股有限公司）, a company incorporated in Hong Kong with limited liability, which is directly owned as to 51% by the Vendor and as to 49% by H&R as at the date of the Sale and Purchase Agreement
“Target Group” the Target Company and its subsidiaries and associate companies
“Tax” all forms of tax, levy, duty, impost, deductions or withholding of any nature imposed, levied, withheld or assessed by any taxing or other similar authority in any part of the world and includes any interest, additional tax, penalty or other charges payable in respect thereof
“Valuation” the valuation of 51% of the issued share capital of the Target Group conducted by the Independent Valuer
“Vendor” Universal Cyberworks International Ltd., a wholly-owned subsidiary of the Company incorporated in the British Virgin Islands with limited liability
“VIE Agreements” the agreements executed for the purpose of establishing the VIE Structure between the Group and VIE Co, details of which are set out in the Company’s announcement dated 18 August 2015
“VIE Co”
Universal eCommerce China Limited（上海環迅電子商務有限公司）, a company incorporated in the PRC with limited liability
“VIE Group” collectively, VIE Co and its subsidiaries

– 4 –

DEFINITIONS

the contractual arrangements through which the financial results of certain entities are consolidated with the financial results of other entities as “variable interest entities” (as defined in Hong Kong and International Financial Reporting Standards)

“VIE Structure” the contractual arrangements through which financial results of certain entities are consolidated with the financial results of other entities as “variable interest entities” (as defined in Hong Kong International Financial Reporting Standards) “HK$” Hong Kong dollars, the lawful currency of Hong Kong “%” per cent

– 5 –

LETTER FROM THE BOARD

UNIVERSAL TECHNOLOGIES HOLDINGS LIMITED 環球實業科技控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1026)

Executive Directors:

Mr. Chen Jinyang (Chairman) Mr. Chau Cheuk Wah (Chief Executive Officer) Mr. Zhou Jianhui Ms. Zhu Fenglian

Registered Office: Cricket Square Hutchins Drive, P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Non-executive Director:

Ms. Zhang Haimei

Independent non-executive Directors:

Dr. Cheung Wai Bun, Charles, J.P. Mr. David Tsoi Mr. Chao Pao Shu George

Head office and principal place of business in Hong Kong: Room A & B2, 11th Floor Guangdong Investment Tower No.148 Connaught Road Central Sheung Wan Hong Kong

30 November 2016

To the Shareholders

Dear Sir or Madam,

EXEMPTED CONNECTED TRANSACTION AND

VERY SUBSTANTIAL DISPOSAL IN RELATION TO THE DISPOSAL OF 51% OF THE ISSUED SHARE CAPITAL OF INTERNATIONAL PAYMENT SOLUTIONS HOLDINGS LIMITED

INTRODUCTION

Reference is made to the Announcement in relation to the Disposal.

On 2 November 2016 (after trading hours of the Stock Exchange), the Vendor and the Purchaser entered into the Sale and Purchase Agreement, pursuant to which the Vendor conditionally agreed to sell and the Purchaser conditionally agreed to acquire the Sale Shares and the Net Shareholders Loans for the aggregate Consideration of HK$158.0 million.

– 6 –

LETTER FROM THE BOARD

The purpose of this circular is to give you, among other things, (i) further details of the Disposal, including the principal terms of the Sale and Purchase Agreement; (ii) the financial information of the Group and the Target Group; (iii) the notice of the EGM; and (iv) other information as required under the Listing Rules.

THE SALE AND PURCHASE AGREEMENT

The principal terms of the Sale and Purchase Agreement are summarized as below:

Date: 2 November 2016 (after trading hours of the Stock Exchange) Parties: (i) Universal Cyberworks International Ltd. (a wholly-owned subsidiary of the Company), as the Vendor; and (ii) Brilliant Dragon Investment Limited, as the Purchaser

Assets to be disposed of

The assets to be disposed of by the Group under the Sale and Purchase Agreement are (a) the Sale Shares free from any Encumbrances and together with all rights attaching thereto including all rights to receive dividends and distributions declared, made or paid on or after the Completion Date; and (b) the Net Shareholders Loans.

Simultaneously with the Completion, the Parties agreed to (a) procure the relevant members of the Target Group to set off the entire amount of the Advances against the Shareholders Loans; and (b) complete the assignment of the Net Shareholders Loans by the relevant members of the Remaining Group to the Purchaser (or its nominees).

Consideration

The aggregate Consideration for the Sale Shares and the assignment of the Net Shareholders Loans is HK$158.0 million, which shall be paid by the Purchaser to the Vendor (or its designated payee) in cleared funds on or before the Completion Date.

The Consideration was determined after arm’s length negotiations between the Vendor and the Purchaser with reference to, among other things, (i) 51% of the unaudited consolidated equity attributable to owners of the Target Group in the amount of approximately HK$97.3 million as at 30 June 2016 (which is calculated based on the unaudited consolidated equity attributable to owners of the Target Group of approximately HK$190.8 million as at 30 June 2016); (ii) the face value of the Shareholders Loans in the amount of approximately HK$108.7 million as at the date of the Sale and Purchase Agreement; and (iii) the face value of the Advances in the amount of approximately HK$61.3 million as at the date of the Sale and Purchase Agreement; (iv) the unsatisfactory financial performance of the Target Group in recent years; and (v) the fierce competition of the third party payment market in the PRC.

– 7 –

LETTER FROM THE BOARD

The consideration for the Sale Shares is approximately HK$110.6 million. For the purpose of assessing the fairness and reasonableness of the consideration for the Sale Shares, the Group has engaged the Independent Valuer to conduct the Valuation in respect of 51% of the issued share capital of the Target Group. By adopting adjusted net asset value method, the fair market value of 51% of the issued share capital of the Target Group as at 30 June 2016 was approximately HK$99.0 million.

The Directors have reviewed and discussed with the Independent Valuer the methodology of, and the bases and assumptions adopted for, the Valuation, which are summarized in the valuation report on the Target Group as set out in Appendix IV to this circular. The following major assumptions have been adopted in the Valuation:

there will be no major changes in the existing political, legal, and economic conditions in the territories in which the Target Group will carry on its business;
there will be no major changes in the current taxation law in mainland China, Hong Kong and the territories the Target Group conducts its business, that the rates of tax payable remain unchanged and that all applicable laws and regulations will be complied with;
exchange rates and interest rates will not differ materially from those presently prevailing;
there are no material unrecorded and/or contingent liabilities in the Target Group as at the date of the Valuation;
the Target Group will utilize and maintain its current operational, administrative and technical facilities to sustain its business;
the Target Group will retain and have competent management, key personnel, and technical staff to implement its business plan and to support its ongoing operation; and
industry trends and market conditions for the related industries will not deviate significantly from current economic forecasts.

As stated in the valuation report, the Independent Valuer has considered the three generally accepted approaches, namely the asset-based approach, market approach and income approach, to develop the value of the Target Group. During the discussion, the Independent Valuer was informed by the Directors that the Target Group incurred substantial losses for the last twelve months ended 30 June 2016 and the intense competition and continuous deterioration of the business environment faced by the Target Group will not change. On this basis, the Independent Valuer considers that the income approach and market approach are not considered to be appropriate for the Valuation since there are great uncertainty as to the Target Group’s profitability in the near future. Also, since market transactions of comparable asset (i.e. online payment gateway business through a VIE structure) are not available, when data cannot be extrapolated from larger transactions, or

– 8 –

LETTER FROM THE BOARD

when transactions are non-existent, the market approach was not used. Therefore, the asset-based approach is considered to be appropriate and the fair market value of the Target Group has been developed through the application of the adjusted net asset value method.

Based on the discussion with the Independent Valuer and the review on the valuation report as set out in Appendix IV to this circular, the Directors concur with the view of the Independent Valuer that the valuation methodology adopted by the Independent Valuer is fair and reasonable to establish the fair market value of the Target Group, and the bases and assumptions for the valuation are fair and reasonable.

The consideration for the Sale Shares of approximately HK$110.6 million represents:

(a) a premium of approximately 13.7% over 51% of the unaudited consolidated equity attributable to owners of the Target Group in the amount of approximately HK$97.3 million as at 30 June 2016 (which is calculated based on the unaudited consolidated equity attributable to owners of the Target Group of approximately HK$190.8 million as at 30 June 2016); and
(b) a premium of approximately 11.7% over the fair market value of 51% of the issued share capital of the Target Group in the value of approximately HK$99.0 million as at 30 June 2016 (based on the Valuation prepared by the Independent Valuer).

The consideration for the Net Shareholders Loans of approximately HK$47.4 million was determined on a dollar-for-dollar basis by reference to its face value in the amount of approximately HK$47.4 million as at the date of the Sale and Purchase Agreement. Under the terms of the Sale and Purchase Agreement, the Parties shall procure that there be no change to the amounts of the Advances and the Shareholders Loans from the date of the Sale and Purchase Agreement to Completion.

The Directors (including the independent non-executive Directors) consider that the terms of the Sale and Purchase Agreement (including the Consideration) are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

VIE Tax Indemnity

Each of the Vendor and the Purchaser shall be responsible for its own Tax arising from or in connection with the transactions contemplated under the Sale and Purchase Agreement, save and except that any Tax arising from or in connection with the change of the registered holder(s) (the “ Nominee Shareholder(s) ”) of the equity interest in any member(s) within the VIE Group payable by the Nominee Shareholder(s) who is a nominee of any member of the Group as at the date of the Sale and Purchase Agreement shall be borne by the Purchaser in full without limitation (the “ Purchaser’s Tax Undertaking ”), and the Purchaser shall indemnify the Vendor or the Nominee Shareholder(s) in full against all Taxes, claims, demands, liabilities, actions, proceedings, fees, costs and expenses which the Vendor or the relevant Nominee Shareholder(s) may suffer in relation to or in connection with the Purchaser’s breach of its obligations under the Purchaser’s Tax Undertaking. It is expected

– 9 –

LETTER FROM THE BOARD

that such tax liabilities will be assessed in accordance with the PRC tax laws and regulations that the PRC capital gains derived from transfer of 51% equity shares in the VIE Co, due to the change of the Nominee Shareholder(s), would be subject to domestic income tax.

Condition Precedent

Completion is conditional upon the Company having obtained the necessary shareholders’ approval at the EGM in relation to the Sale and Purchase Agreement and the transactions contemplated thereunder.

The Vendor shall use its reasonable endeavors to satisfy the Condition by the Long Stop Date (i.e. 31 December 2016, or such later date as agreed by the Parties in writing). If the Condition is not satisfied by the Long Stop Date, then unless both Parties mutually agree to extend the Long Stop Date, the Sale and Purchase Agreement shall terminate forthwith and neither Party shall have any liability towards the other Party save for any antecedent breach of the Sale and Purchase Agreement. (a) If the termination is as a result of the Vendor’s failure to use its reasonable endeavours to obtain the Shareholders’ approval at the EGM, then the Purchaser is entitled to receive from the Vendor a full reimbursement of the professional fees and costs incurred in relation to the negotiation, signing and performance of the Sale and Purchase Agreement accrued prior to termination (the “ Terminal Cost Reimbursement ”), which in aggregate shall not exceed the maximum amount of HK$3 million (the “ Maximum Reimbursement Limit ”); and (b) if the Shareholders’ approval is obtained but the Purchaser fails to complete for whatever reason (where the Vendor is ready and willing to proceed with Completion), then the Vendor is entitled to receive from the Purchaser a sum which is equivalent to the Terminal Cost Reimbursement, which shall not exceed the Maximum Reimbursement Limit.

Completion

Completion shall take place on the Completion Date, which was originally defined in the Sale and Purchase Agreement as the tenth Business Day after the satisfaction of the Condition, or such later date as agreed by the Parties in writing prior to Completion. On 25 November 2016, the Parties mutually consented in writing to change the Completion Date to a day falling within the period commencing on the first Business Day and ending on the tenth Business Day after the satisfaction of the Condition, or any other date as may be agreed by the Parties in writing prior to Completion. Upon Completion, the Target Company will cease to be a subsidiary of the Company and all the results and assets and liabilities of the Target Group will no longer be consolidated to the financial statements of the Group.

INFORMATION OF THE TARGET GROUP

The Target Company is an investment holding company incorporated in Hong Kong with limited liability. The Target Group (including the VIE Group which is effectively controlled through the VIE Structure) is principally engaged in the payment solutions business in the PRC.

– 10 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, the Target Company was owned as to 51% by the Vendor and as to 49% by H&R (which is, in turn, 50% owned by the Purchaser). Set out below is the shareholding structure of the Target Group as at the Latest Practicable Date and upon Completion:

As at the Latest Practicable Date:

==> picture [402 x 362] intentionally omitted <==

----- Start of picture text -----

Universal Technologies Brilliant Dragon Investment
Holdings Limited Limited
(i.e. the Company) (i.e. the Purchaser)
100% 50%
Universal Cyberworks
H and R Group Limited
International Ltd
(i.e. H&R)
(i.e. the Vendor)
51% 49%
International Payment
Solutions Holdings Limited
(i.e. the Target Company)
100%
Universal eCommerce
China Limited 100% International Payment
上海環迅電子商務有限公司 (Controlled via the 易之付（上海）電子科技有限公司Solutions (China) Limited
(i.e. VIE Co) VIE Agreements)
67.51% 49.5% 100% 100%
Shanghai Renda Shanghai Phetion Universal Union Collection
Universal ECPAY Limited迅付信息科技有限公司 Commercial FactoringCompany Limited Information TechnologyCompany Limited Limited
上海聯匯電子商務有限公司
上海仁大商業保理有限公司上海斐盛信息科技有限公司
100%
100% 100%
Shanghai Zhuofu
IPS E-Commerce Hongkong Shanghai Chixing Property Technologies Company
Limited Management Company Limited
環迅支付電子商務有限公司 Limited 上海卓付電子科技有限公司
上海馳星物業管理有限公司
100% 100%
H and R International Speed International
Investment Limited Technology
漢仁國際投資有限公司 Company Limited
斯比得科技有限公司
----- End of picture text -----

– 11 –

LETTER FROM THE BOARD

Upon Completion:

==> picture [405 x 354] intentionally omitted <==

----- Start of picture text -----

Brilliant Dragon Investment
Limited
(i.e. the Purchaser)
50%
51% H and R Group Limited
(i.e. H&R)
49%
International Payment
Solutions Holdings Limited
(i.e. the Target Company)
100%
Universal eCommerceChina Limited 100% Solutions (China) LimitedInternational Payment
上海環迅電子商務有限公司 (Controlled via the 易之付（上海）電子科技
(i.e. VIE Co) VIE Agreements) 有限公司
67.51% 49.5% 100% 100%
Shanghai Renda Commercial Shanghai Phetion Universal Union Collection
Universal ECPAY Limited Factoring Company Information Technology Limited
迅付信息科技有限公司 Limited Company Limited 上海聯匯電子商務有限公司
上海仁大商業保理有限公司上海斐盛信息科技有限公司
100%
100% 100%
Shanghai Zhuofu
IPS E-Commerce Hongkong Shanghai Chixing Property Technologies Company
Limited Management Company Limited
環迅支付電子商務有限公司 Limited 上海卓付電子科技有限公司
上海馳星物業管理有限公司
100% 100%
H and R International Speed International
Investment Limited Technology Company
Limited
漢仁國際投資有限公司
斯比得科技有限公司
----- End of picture text -----

Financial information of the Target Group

The unaudited financial information of the Target Group for the two years ended 31 December 2015 and for the six months ended 30 June 2016 is set out as below:

		For the	For the	For the six
		year ended	year ended	months ended
		31 December	31 December	30 June
		2014	2015	2016
		(HK$’000)	(HK$’000)	(HK$’000)
		(unaudited)	(unaudited)	(unaudited)
Turnover		278,566	219,031	87,172
Profit/(loss)	before taxation	35,892	(25,966)	(36,929)
Profit/(loss)	for the year/period	26,246	(27,441)	(37,068)

As at 30 June 2016, the unaudited total assets and net assets of the Target Group were HK$1,048,960,000 and HK$246,196,000, respectively.

– 12 –

LETTER FROM THE BOARD

INFORMATION OF THE NET SHAREHOLDERS LOANS

The Shareholders Loans represent all the liabilities (including loans, advances, prepayments and inter-company accounts) owed by relevant members of the Target Group to relevant members of the Remaining Group as at the Completion Date.

The Advances represent all the liabilities (including loans, advances, prepayments and inter-company accounts) owed by relevant members of the Remaining Group to relevant members of the Target Group as at the Completion Date.

As at the date of the Sale and Purchase Agreement, the face value of the Shareholders Loans, the Advances and the Net Shareholders Loans amount to approximately HK$108.7 million, approximately HK$61.3 million and approximately HK$47.4 million, respectively. Under the terms of the Sale and Purchase Agreement, the Parties shall procure that there be no change to the amounts of the Advances and the Shareholders Loans from the date of the Sale and Purchase Agreement to Completion.

Pursuant to the terms of the Sale and Purchase Agreement, the Parties agree to (a) procure the relevant members of the Target Group to set off the entire amount of the Advances against the Shareholders Loans; and (b) complete the assignment of the Net Shareholders Loans by the relevant members of the Remaining Group to the Purchaser (or its nominees) simultaneously with the Completion.

INFORMATION OF THE VENDOR

The Vendor is a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Company. Its principal activities is investment holding and its principal asset is its investment in 51% shareholding interest in the Target Company. As at the Latest Practicable Date, the Vendor directly held 51% of the issued share capital of the Target Company.

INFORMATION OF THE PURCHASER

Based on the information provided by the Purchaser, (a) the Purchaser is a company incorporated in the British Virgin Islands with limited liability; (b) the principal activities of the Purchaser is investment holding and its sole asset is its investment in 50% shareholding interest in H&R; (c) H&R is the purchaser under the Previous Disposal Agreement; (d) subsequent to completion of the Previous Disposal Agreement in December 2014, H&R holds 49% of the issued share capital of the Target Company; (e) the Purchaser is wholly owned, legally and beneficially, by Ms. Ren Lili; and (f) Ms. Ren Lili is the sole director of the Purchaser.

Ms. Ren Lili is currently one of the directors of the Target Company, and was an executive Director of the Company from July 2009 to March 2012 and a director of certain subsidiaries of the Target Group from 2007 to 2012. Apart from holding the entire issued share capital of the Purchaser, Ms. Ren Lili also holds 50% shareholding interest in Harvest Dragon Holdings Limited, an investment holding company, which, in turn, holds 10% shareholding interest in H&R. Based on the information provided by the Purchaser, the other

– 13 –

LETTER FROM THE BOARD

40% shareholding interest of H&R is owned by Great Kylin Investment Limited, an investment holding company, which in turn is indirectly owned by Beijing Shiji Information Technology Co, Limited (“ Beijing Shiji ”), a company listed on the Shenzhen Stock Exchange with stock code 002153 and whose principal business activities include the development and sale of the applied software for hotel and catering information system. Beijing Shiji is also the 100% parent company of Beihai Shiji Information Technology Co., Ltd., a 22.5% shareholder of Universal ECPAY Limited, a member of the Target Group. Save as disclosed above, the Purchaser and its ultimate beneficial owner, Ms. Ren Lili, have no other relation with any Directors, senior management or substantial Shareholders and their respective associates. To the best knowledge, information and belief of the Directors having made all reasonable enquires with the Purchaser and based on the written confirmation given by the Purchaser to the Company, Ms. Ren Lili and her associates did not hold any Shares as at the Latest Practicable Date.

To the best knowledge, information and belief of the Directors having made all reasonable enquires with the Purchaser, each of Great Kylin Investment Limited and its ultimate beneficial owner, Beijing Shiji, is a third party independent of the Company and its connected persons and their respective associates. As Ms. Ren Lili is a connected person (at the subsidiary level) by virtue of her directorship in the Target Company, and the Purchaser, being a company controlled by Ms. Ren Lili, is an associate of connected person (at the subsidiary level) of the Company.

REASONS FOR AND BENEFITS OF THE DISPOSAL

The Group is principally engaged in investment holding, provision of payment solutions and related services, timber trading and furniture manufacturing, system integration and technical platform services, property investment, building management and water supply and related services.

In the past few years, the third-party online payment market in the PRC, in which the Target Group operates, has been expanding rapidly. According to the statistics compiled and released by iResearch, a PRC-based internet market research institution, the gross merchandise value (“ GMV ”) of the third-party online payment services in the PRC increased from approximately RMB2.2 trillion in 2011 to approximately RMB11.9 trillion in 2015, representing a compound annual growth rate (“ CAGR ”) of approximately 52.5%. It is estimated by iResearch that the GMV of the third-party online payment services in the PRC will increase to approximately RMB26.9 trillion in 2019.

Nevertheless, the third-party online payment market in the PRC is considered as an oligopoly. Notwithstanding the fact that there were 268 payment companies in the PRC holding a valid administration of payment license（支付業務許可證）as at 31 December 2015, the third-party online payment market in the PRC is principally dominated by the top-three market leaders, namely Alipay（支付寶）, Tenpay（財付通）and Yspay（銀商商務）. According to the research conducted by iResearch, Alipay, Tenpay and Yspay in aggregate occupied approximately 78.4% of the total market share in 2015. The Target Group occupied only approximately 1.2% of the total market share in 2015, decreasing from approximately 2.7% of the total market share in 2014.

– 14 –

LETTER FROM THE BOARD

In addition, following the increasing acceptance of mobile payment, more people turned to use mobile payment rather than online payment. According to the figures released by iResearch, the GMV of the third-party mobile payment services in the PRC skyrocketed at a CAGR of approximately 235.8% from approximately RMB80 billion in 2011 to approximately RMB10,171 billion in 2015. It is expected that the GMV of the third-party mobile payment services in the PRC will reach approximately RMB21,930 billion in 2017 and will, at the first time, exceed the GMV of the third-party online payment services.

Under the intensified industry competition, revenue of the Target Group dropped from approximately HK$278.6 million for the year ended 31 December 2014 to approximately HK$219.0 million for the year ended 31 December 2015, representing an annual decrease of approximately 21.4%. Revenue of the Target Group amounted to approximately HK$87.2 million for the six months ended 30 June 2016, as compared to approximately HK$142.0 million for the corresponding period in 2015. According to the unaudited management accounts of the Target Group, the Target Group turned from a profit making position of approximately HK$26.2 million for the year ended 31 December 2014 to a loss making position of approximately HK$27.4 million for the year ended 31 December 2015. The Target Group continued to record loss of approximately HK$37.1 million for the six months ended 30 June 2016.

Furthermore, on 11 August 2016, the People’s Bank of China published the results of renewal of the first batch of payment business licenses. The payment license held by the Target Group was renewed for five years until 2 May 2021, covering four permitted payment gateways, namely: (a) internet payment; (b) mobile phone payment; (c) fixed line telephone payment; and (d) bank card acceptance (principally permitting payment through physical point-of-sale (POS) terminals at retail shops). While the scope of permitted business under the three former means of payment remains intact after the renewal, the permitted scope of bank card acceptance business of the Target Group was restricted from nationwide (before the renewal) to four specified provinces and one specified city (after the renewal). The Directors consider that, with geographical limitation on the renewed license so far as bank card acceptance business is concerned, the original business plan of the Target Group in relation to its offline development through cooperation with, and POS-terminal installation at, nationwide retail chains in China would be affected.

In view of the oligopoly situation of the third-party online payment market in the PRC as well as the deteriorating historical financial performance and the worsening operating environment of the Target Group, the Company holds a conservative view about the prospect of the Target Group.

The Disposal is not part of a series of arrangements to circumvent any Listing Rules requirements, but was decided upon by the Directors by reference to genuine business considerations as summarized above in this circular. Since around March 2016, the Company has been conducting internal business assessment with the management of the Target Group and H&R (the 49% shareholder of the Target Group) with the view to formulating business strategies to improve the financial performance of the Target Group going forward, including possibly an enhanced budget plan involving extra spending by the Target Group on business development, marketing campaigns, equipment, staff and research efforts which essentially called for the need of further capital injection by the shareholders of the Target Group

– 15 –

LETTER FROM THE BOARD

(including the Company). During such conversations, H&R raised for the first time the possibility of buying out the Company’s shareholding interest in the Target Group. However, during the negotiations which took place between the Company and H&R from April 2016 to August 2016, the parties have yet to reach a consensus on the terms and conditions of the possible Disposal, including in particular the amount of Consideration. It was not until around late September 2016 that the parties eventually came to a reconcilable range in terms of the Consideration for the Disposal.

The Directors consider that the Disposal represents a good opportunity for the Group to realize its remaining investment in the Target Group and allows the Group to reallocate its resources to its other existing businesses and other investment opportunities as and when they arise. The Board intends to apply the aggregate Consideration of HK$158.0 million to finance the development of the other existing businesses of the Group, to finance other investment opportunities as and when they arise, and for the Group’s general working capital. However, apart from the proposed acquisition of 100% shareholding interest in Hooray Asset Management Limited as announced by the Company on 20 September 2016, the Company has yet to identify any other suitable investment opportunity. Save as the acquisition of Hooray Asset Management Limited, as at the Latest Practicable Date, the Company has not under negotiation with any parties, nor had it entered into any agreement, arrangement, undertaking and/or understanding in respect of acquisition of any companies and/or business. In particular, the Company has no intention to acquire the remaining 51% interest in Qinghui Properties Limited.

The Board has not yet determined the exact allocation of the net proceeds from the Disposal as at the Latest Practicable Date. However, the Group has been monitoring, and will continue to monitor, the existing businesses of the Remaining Group and new business investment opportunities. After the identification of business opportunities together with the availability of such details and progress (such as the exact investment targets, nature and industry of investment, cost and benefits or other commercial terms), decisions will be made as to, among other things, the allocation of the amounts of net proceeds, the timeline thereof and the manner through which the proceeds will be applied. The Company will update the Shareholders on the plan on the use of proceeds and the actual use of proceeds in the Group’s coming financial report(s). To the extent that the net proceeds are not immediately used for the intended purposes described above, such net proceeds will be placed in deposits with banks.

Having considered all of the above factors, the Directors (including all the independent non-executive Directors) are of the view that the terms of the Sale and Purchase Agreement are on normal commercial terms and are fair and reasonable, and that the entering into of the Sale and Purchase Agreement is in the interests of the Company and Shareholders as a whole.

FINANCIAL EFFECT OF THE DISPOSAL

Upon Completion, the Target Company will cease to be a subsidiary of the Company and all the results and assets and liabilities of the Target Group will no longer be consolidated to the financial statements of the Group.

– 16 –

LETTER FROM THE BOARD

Based on note 5 to the unaudited pro forma financial information of the Remaining Group as set out in Appendix III to this circular, assuming the Disposal had taken place on 30 June 2016, the Company would have recorded an estimated gain of approximately HK$2.5 million, which is calculated on the basis of the Consideration of HK$158.0 million after deduction of (i) the Net Shareholders Loans as at 30 June 2016 of approximately HK$47.4 million; (ii) net assets of the Target Group attributable to the Company as at 30 June 2016 of approximately HK$97.3 million; and (iii) estimated capital gain tax and direct expenses in relation to the Disposal of approximately HK$10.8 million.

Based on the unaudited pro forma consolidated statement of financial position of the Remaining Group as set out in Appendix III to this circular, assuming Completion had taken place on 30 June 2016, (i) the unaudited pro forma consolidated total assets of the Remaining Group would have decreased from approximately HK$2,617.0 million to approximately HK$1,787.3 million; and (ii) the unaudited pro forma consolidated total liabilities of the Remaining Group would have decreased from approximately HK$1,761.7 million to approximately HK$1,078.4 million.

Shareholders should note that the above figures are for illustrative purpose only. The actual gain or loss on the Disposal and the actual effect on the assets and liabilities of the Remaining Group may be different from the above and will be determined based on the financial position of the Target Group on the Completion Date and the review by the Group’s auditors after Completion.

LISTING RULES IMPLICATIONS

As at the Latest Practicable Date, the Target Company was beneficially owned as to 51% by the Company and as to 49% by H&R (which is, in turn, 50% owned by the Purchaser). In addition, Ms. Ren Lili is a director of the Target Company. Accordingly, the Purchaser is a connected person of the Company (at the subsidiary level rather than at the Company’s level) and thus the Disposal constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

Given that (i) the Board considers that the Sale and Purchase Agreement and the transactions contemplated thereunder are on normal commercial terms, are fair and reasonable and in the interests of the Company and the Shareholders as a whole; (ii) the Board has approved the Sale and Purchase Agreement and the transactions contemplated thereunder; and (iii) the independent non-executive Directors have confirmed that the terms of the Sale and Purchase Agreement and the transactions contemplated thereunder are fair and reasonable, the Sale and Purchase Agreement and the transactions contemplated thereunder fall within the exemption under Rule 14A.101 of the Listing Rules and are subject to the reporting and announcement requirements but exempted from the circular, independent financial advice and shareholders’ approval requirements of Chapter 14A of the Listing Rules. However, as the relevant percentage ratios of the Disposal is more than 75%, the Disposal constitutes a very substantial disposal of the Company under Chapter 14 of the Listing Rules and is subject to the reporting, announcement and the Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

– 17 –

LETTER FROM THE BOARD

EGM

An EGM will be convened and held at Room A & B2, 11th Floor, Guangdong Investment Tower, No. 148 Connaught Road Central, Sheung Wan, Hong Kong on Friday, 16 December 2016 at 11:00 a.m., at which an ordinary resolution will be proposed to seek the Shareholders’ approval of the Sale and Purchase Agreement and the transactions contemplated thereunder (including the Disposal).

As disclosed in the section headed “Information of the Purchaser” above, the Purchaser is wholly owned by Ms. Ren Lili. Accordingly, Ms. Ren Lili is deemed to be interested in the Disposal and shall abstain from voting on the resolution to be proposed at the EGM to approve the Disposal. The Purchaser confirmed to the Company that as at the Latest Practicable Date, Ms. Ren Lili and her associates did not hold any Shares.

To the best knowledge, information and belief of the Directors having made all reasonable enquiries, none of the Shareholders (save and except for Ms. Ren Lili) has any material interest in the Disposal and therefore, no Shareholder is required to abstain from voting on the resolution to be proposed at the EGM to approve the Disposal.

RECOMMENDATION

The Directors (including the independent non-executive Directors) are of the view that the terms of the Sale and Purchase Agreement are on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the Sale and Purchase Agreement and the transactions contemplated thereunder (including the Disposal).

WARNING OF THE RISKS OF DEALINGS IN THE SHARES

Completion is conditional upon the satisfaction of the Condition set out in the section headed “Condition Precedent” in this circular, including the approval of the Sale and Purchase Agreement and the transactions contemplated thereunder by Shareholders at the EGM. Accordingly, the Disposal may or may not proceed. Shareholders and potential investors should therefore exercise caution when dealing in the securities of the Company.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendices to this circular and the notice of the EGM.

By order of the Board UNIVERSAL TECHNOLOGIES HOLDINGS LIMITED Chen Jinyang Chairman

– 18 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

The financial information of the Group for each of the three years ended 31 December 2013, 2014 and 2015 and the six months ended 30 June 2016 are disclosed in the following documents which have been published on the website of the Stock Exchange (www.hkexnews.hk) and the website of the Company (www.uth.com.hk):

pages 43 to 111 of the annual report of the Company for the year ended 31 December 2013 (http://www.hkexnews.hk/listedco/listconews/SEHK/2014/0417/ LTN20140417408.pdf)
pages 39 to 107 of the annual report of the Company for the year ended 31 December 2014 (http://www.hkexnews.hk/listedco/listconews/SEHK/2015/0429/ LTN201504291022.pdf)
pages 49 to 135 of the annual report of the Company for the year ended 31 December 2015 (http://www.hkexnews.hk/listedco/listconews/SEHK/2016/0421/ LTN201604211015.pdf)
pages 3 to 40 of the interim report of the Company for the six months ended 30 June 2016 (http://www.hkexnews.hk/listedco/listconews/SEHK/2016/0906/ LTN20160906930.pdf)

2. INDEBTEDNESS STATEMENT

As at the close of business on 31 October 2016, being the latest practicable date for the purpose of this indebtedness statement, the Remaining Group had outstanding bank borrowings of RMB631,420,000 (equivalent to approximately HK$721,808,000) which are secured by time deposit, trade receivables, equity interests, land use right, guarantee by subsidiaries of the Company and had unsecured government loans of RMB3,455,000 (equivalent to approximately HK$3,949,000).

As at the close of business on 31 October 2016, being the latest practicable date for the purpose of this indebtedness statement, the Target Group had unsecured and unguaranteed bank loan of RMB35,000,000 (equivalent to approximately HK$40,010,000) and outstanding bank borrowings of HK$21,285,000) which are guaranteed and secured by properties, subsidiaries, a key management personnel of a subsidiary.

Save as aforesaid above and apart from intra-group liabilities and normal trade bills payables arising in the ordinary course of business, as at the Latest Practicable Date, the Group did not have any (i) debt securities of the Group issued and outstanding, or authorised or otherwise created but unissued; (ii) term loans; (iii) other borrowings or indebtedness in the nature of borrowing of the Group including bank overdrafts and liabilities under acceptances (other than normal trade bills) or acceptance credits or hire purchase commitments; (iv) mortgages and charges of the Group; or (v) guarantees or contingent liabilities.

– I-1 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. SUFFICIENCY OF WORKING CAPITAL

After taking into account the Group’s existing cash and bank balances, internal resources, the expected cash flow from the Group’s ordinary and usual course of business and the net proceeds from the Disposal, the Directors are of the opinion that the working capital available to the Group is sufficient for the Group’s requirements for at least twelve months from the date of this circular.

4. MATERIAL ADVERSE CHANGE

Save as disclosed below, as at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position or prospects of the Group since 31 December 2015, being the date to which the latest audited consolidated financial statements of the Group were made up:

(i) As disclosed in the interim report of the Company for the six months ended 30 June 2016, the Group recorded an increase in net loss attributable to the Shareholders from approximately HK$17.6 million for the six months ended 30 June 2015 to approximately HK$22.4 million for the six months ended 30 June 2016, which was mainly due to (i) the slowdown in China’s economic growth and the intensified competition for the payment solutions industry in China, resulting in a reduction in revenue and an increase in losses of the Group’s payment solutions business; and (ii) the currency exchange loss on Renminbi denominated assets of the Group arising from the devaluation of Renminbi.
(ii) On 11 August 2016, the People’s Bank of China published the results of renewal of the first batch of payment business licenses. The payment license held by the Target Group was renewed for five years until 2 May 2021, covering four permitted payment gateways, namely: (a) internet payment; (b) mobile phone payment; (c) fixed line telephone payment; and (d) bank card acceptance (principally permitting payment through physical point-of-sale (POS) terminals at retail shops). While the scope of permitted business under the three former means of payment remains intact after the renewal, the permitted scope of bank card acceptance business of the Target Group was restricted from nationwide (before the renewal) to four specified provinces and one specified city (after the renewal).

– I-2 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

Upon Completion, the Remaining Group will be principally engaged in (i) water supply and related services (“ Water Supply Business ”); (ii) property investment, property management business; and (iii) timber trading and furniture manufacturing, system integration and technical platform services.

The Water Supply Business

The Group tapped into the Water Supply Business in the PRC in December 2015 by acquiring 49% equity interest in 東莞市擎琿置業有限公司 (Qinghui Properties Limited) and its eight subsidiaries (the “ Qinghui Group ”). The Water Supply Business currently holds three water treatment plants (the “ Existing Plants ”), namely Qixinggang Water Plant and No. 1 & No. 2 Taihe Water Plants, which serve the general public including households, industrial and commercial in urban areas in two districts of Qingyuan City, Guangdong, namely, Qingcheng District and Qingxin District, respectively, covering an aggregate area of approximately 175 square kilometers. The daily production capacity of the Existing Plants reaches 310,000 cubic meters, and the Existing Plants are approaching full capacity in general. For the two years ended 31 December 2014 and 2015 and the six months ended 30 June 2016, the Qinghui Group supplied approximately 95,700,000 m[3] , 99,900,000 m[3] and 49,400,000 m[3] of water to customers. The Water Supply Business charges its customers principally based on the tariff set by the local price bureau and the actual volume consumed measured by their respective water meters, and collects the fees directly from their customers. Residential and commercial customers are the main customer base of the Water Supply Business. As at 30 June 2016, the Water Supply Business had 360 employees.

For the sake of expanding the Water Supply Business, as at the Latest Practicable Date, a new water treatment plant (Taihe Plant #2 Phase 2) is constructed with planned daily production capacity of approximately 100,000 m[3] , which is located next to one of the Existing Plants (i.e. Taihe Plant #2 Phase 1). Construction of the new plant was completed and accepted in November 2016 and the water purification system and sludge treatment system were under adjustment and testing as at the Latest Practicable Date. It is expected initial production could be achieved in December 2016. The new plant will gradually increase its production capacity upon completion of other installation and examination of the water plant facilities and the expansion of water pipeline coverage in local regions of Qingyuan City. Once the new water plant runs in full capacity, the total water supply capacity will be significantly increased by 32.3% from 310,000 m[3] to 410,000 m[3] .

Moreover, the Directors have considered the overview of the water supply industry in Qingyuan City, Guangdong, the PRC, in which the Existing Plants are located. According to the figures published in the official website of the Statistics Bureau of Guangdong Province, the urban population in Qingyuan City reached approximately 1.84 million in 2014, representing a compound annual growth rate (“ CAGR ”) of approximately 1.2% as compared to approximately 1.76 million in 2010. The gross domestic product of Qingyuan City increased from approximately RMB87.3 billion in 2010 to approximately RMB119.8 billion in 2014, representing a CAGR of approximately 8.22%. According to the statistics published by Water Resources Department of Guangdong Province, the annual total water consumption for Qingyuan City (including both rural and urban area) in 2015 was approximately 1.8

– I-3 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

billion m[3] , representing a compound annual decline rate of approximately 2.1% as compared to approximately 2.0 billion m[3] in 2010. Such decrease was mainly due to the decrease in water consumption for agricultural and industrial use. Notwithstanding the decline in total water consumption, water consumption for daily-life use in urban area [(Note)] increased from approximately 110.0 million m[3] in 2010 to approximately 136.0 million m[3] in 2015, representing a CAGR of approximately 4.3%. Having considered the facts that (i) the Existing Plants principally serve the general public in urban areas in Qingcheng District and Qingxin District, Qingyuan City; (ii) residential and commercial customers are the main customer base of the Water Supply Business; and (iii) water consumption for daily-life use in urban area increased from approximately 110.0 million m[3] in 2010 to approximately 136.0 million m[3] in 2015, representing a CAGR of approximately 4.3%, the Directors are of the view that the demand of tap water for daily-life use in urban area in Qingyuan City is under healthy growth, which is expected to be favorable to the operation and development of the Water Supply Business.

In view of the long history of operation since 1989, the public utilities characteristics of water business, the existing operation scale and the expansion plan of the Water Supply Business, as well as the overview of the water supply industry in Qingyuan City, the Directors are confident that the Water Supply Business will continue to operate at a sizeable scale and may achieve steady growth alongside the city development and the expansion plan of water plants.

Note: Water consumption for daily-life use in urban area comprises residential use and public use (including but not limited to commercial trading, transportation and construction).

The Other Businesses

As at the Latest Practicable Date, the Remaining Group held a number of properties in Hong Kong, Shanghai and Qingyuan City, the PRC. The Directors believe that the properties will continue to support the ongoing operation of the Water Supply business and provide stable revenue to the Remaining Group.

Apart from the properties, the Company’s management is in an ongoing process to look for suitable business opportunities in other divisions, including timber trading and furniture manufacturing, system integration and technical platform services. In addition, if the Company completes the acquisition of the asset management company (as disclosed in its announcement dated 20 September 2016), the Company will be on its way to target a diversified investment portfolio and wide business spectrum, to avoid over-reliance on single business and to become less vulnerable to business cycles of any particular business segments.

– I-4 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

6. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

Set out below is the management discussion and analysis on the Remaining Group:

For the six months ended 30 June 2016 (“PE2016”)

1. Business and financial review

The Remaining Group recorded a turnover of approximately HK$146,475,000 during PE2016 which was mainly attributable to the newly-acquired water supply business. Gross profit of the Remaining Group for PE2016 was approximately HK$46,299,000. The Remaining Group’s unaudited net loss attributable to the shareholders of the Company for PE2016 was approximately HK$3,376,000. Such loss was mainly due to the huge administrative expenses including salaries and other benefits, depreciation and amortisation.

The Remaining Group was principally engaged in the water supply business and the provision of related services. In PE2016, the Remaining Group enhanced its management and allocation of resources to tighten the cost control, laying a solid foundation for the sustainable development of the water supply business and to better prepare for future development. The segmental profit for the water supply business was attributable to the subsisting high temperature, expanded coverage of water supply services and strong market demand for water, all of which contributed to a record-high sales volume of water during PE2016. Another source of profit was the provision of value-added services ancillary to the water supply business, mainly driven by customers’ demand for tailor-made solutions. In addition, as the Remaining Group completed a comprehensive technology upgrade of the equipment during PE2016, high production capacity and effective cost control were attained.

In respect of property investment and property management business, investment properties continued to contribute steady rental income to the Remaining Group during PE2016.

2. Business prospect

The Remaining Group will continue to strengthen self-improvement in the course of stable development, and focus on equipment maintenance in the second half of 2016. Furthermore, internal management, personnel training, goal setting management, standardisation and institutionalisation of business process shall be improved and enhanced in an efficient and timely manner to better prepare for expansion and further development of the water supply and related business. By performing internal audit and supervisory function, the Remaining Group can balance the risk, cost and value in the operation as well as establish a solid foundation for development of the healthy and stable corporation.

– I-5 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. Cash and bank balances and fixed deposits

As at 30 June 2016, the Remaining Group’s cash and bank balances and fixed deposits amounted to approximately HK$296,024,000. The increase in cash and bank balances and fixed deposits was mainly due to the new bank loans obtained by water supply group business during PE2016. As at 30 June 2016, approximately 77.9% of cash and bank balances was denominated in Renminbi while the remaining portion was mainly denominated in Hong Kong Dollars.

4. Pledged time deposit

As at 30 June 2016, the Remaining Group’s pledged time deposit amounted to approximately HK$274,912,000.

5. Bank and other borrowings

As at 30 June 2016, the Remaining Group’s bank and other borrowings amounted to approximately HK$751,963,000. Details of the loans are as follows:

(i) Secured bank loan of HK$274,923,000 was interest-bearing at 3.1% per annum, repayable within one year and denominated in Renminbi;
(ii) Secured bank loans of HK$49,048,000, HK$37,370,000, HK$115,612,000 and HK$93,424,000 were interest-bearing at 4.156%, 3.806%, 4.288% and 4.288% respectively per annum, repayable after one year and denominated in Renminbi;
(iii) Secured bank loan of HK$177,633,000 was interest-bearing at 6.765% per annum, repayable after one year and denominated in Renminbi;
(iv) Unsecured government loan of HK$1,134,000 was interest-bearing at 3.3% per annum, repayable within one year and denominated in Renminbi;
(v) Unsecured government loan of HK$2,395,000 was interest-bearing at 3.3% per annum, repayable after one year to five years and denominated in Renminbi; and
(vi) Unsecured government loan of HK$424,000 was interest-bearing at 3.3% per annum, repayable after five years and denominated in Renminbi.

6. Liquidity and financial resources

As at 30 June 2016, the Remaining Group had net current assets of approximately HK$82,555,000.

As at 30 June 2016, current assets of the Remaining Group comprised inventories of approximately HK$2,678,000, debtors of approximately HK$17,096,000, deposits, prepayments and other receivables of approximately HK$56,166,000, prepaid land lease

– I-6 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

premium of approximately HK$102,000, fixed deposits of approximately HK$47,132,000, pledged time deposit of approximately HK$274,912,000 and cash and bank balances of approximately HK$248,892,000.

As at 30 June 2016, current liabilities of the Remaining Group comprised bank and other borrowings of approximately HK$327,868,000, trade payables of approximately HK$1,899,000, payable to merchants of approximately HK$3,014,000, deposits received, sundry creditors and accruals of approximately HK$154,258,000, amounts due to related companies of approximately HK$73,908,000 and tax payable of approximately HK$3,476,000.

The gearing ratio (defined as a percentage of total liabilities less deferred tax liability over total assets less deferred tax assets) of the Remaining Group at 30 June 2016 was 57.2%.

The Board considers that the Remaining Group’s existing financial resources are sufficient to fulfill its commitments, current working capital requirements and further development. In the long term, the Board believes that the Remaining Group will continue to fund its foreseeable expenditures through cash flow from operations. However, for a more massive scale of expansion and development, debt or equity financing may be required.

7. Employees

As at 30 June 2016, the total number of employees of the Remaining Group was 377. Employees (including directors) are remunerated according to their performance and working experience. On top of basic salaries, discretionary bonus and share options may be granted to eligible employee by reference to the Remaining Group’s performance as well as the individual’s performance. In addition, the Remaining Group’s also provides social security benefits to its staff such as Mandatory Provident Fund Scheme in Hong Kong and the pension scheme in the PRC.

8. Significant investments, acquisitions and disposals

There was no significant acquisition and disposal of subsidiaries of the Remaining Group during PE2016

9. Charges on the Remaining Group’s assets

The Remaining Group’s bank loans at 30 June 2016 were secured by:

(i) charge over a time deposit amounting to RMB235,420,000 (equivalent to approximately HK$274,912,000);
(ii) charges over a land use right under service concession arrangement with aggregate carrying amounts of RMB4,299,000 (equivalent to approximately HK$5,021,000);

– I-7 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(iii) pledge of 49% equity interest in Qingyuan Water Supply Development Company Limited;
(iv) pledge of 25% equity interest in Qingyuan Qingxin District Taihe Water Company Limited;
(v) pledge of trade receivables under service concession arrangement with a carrying amount of RMB14,586,000 (equivalent to approximately HK$17,033,000); and
(vi) guarantee by Xinhongcheng Enterprise Management Company Limited and Qingyuan Qingxin District Huike Properties Company Limited, both being the subsidiaries of the Company.

10. Details of future plans for material investments or capital assets

On 21 November 2006, Qingyuan Qingxin District Taihe Water Company Limited (“ Taihe Water ”, a subsidiary of the Remaining Group) entered into service concession arrangement with the local government of Qingyuan City, Guangdong Province, whereby Taihe Water was contracted to construct the water supply plants and to operate and maintain the water supply plants under a build-operate-transfer basis.

As at 30 June 2016, a new water treatment plant (Taihe Plant #2 Phase 2) with daily production capacity of approximately 100,000 tonnes was under construction. The construction is expected to complete and ready for production in the second half of year 2016.

Save as disclosed above, there was no other future plan for material investments or capital assets during PE2016.

11. Currency risk

The Remaining Group mainly operates in the Mainland China and most of the Remaining Group’s transactions, assets and liabilities are denominated in Renminbi. The Remaining Group is exposed to foreign currency risk due to the exchange rate fluctuation of Renminbi against Hong Kong Dollars. Fluctuation of Renminbi against Hong Kong Dollars is expected to be moderate.

During PE2016, the Remaining Group did not enter into any arrangement to hedge its foreign currency exposure. However, the management monitors the related foreign currency exposure closely and will consider hedging significant currency exposure should the need arise.

12. Capital Commitment

At 30 June 2016, the Remaining Group’s contracted but not provided for capital commitment included acquisition of property, plant and equipment of approximately HK$108,887,000 and other intangible assets (as defined under the adopted accounting

– I-8 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

standards) of approximately HK$8,205,000. Such capital commitment is for the expansion of water treatment capacity and pipeline network, as well as the maintenance capital expenditures in the normal course of business of Qingyuan Water Supply Development Company Limited and Qingyuan Qingxin District Taihe Water Company Limited.

13. Contingent Liabilities

The Remaining Group is subject to legal proceedings and claims arising from the conduct of its business operations, including litigation related to directors and shareholders. While it is impossible to ascertain the ultimate legal and financial liability with respect to contingent liabilities including lawsuits, the Directors believe that the aggregate amount of such liabilities, if any, in excess of amounts accrued, will not have a material adverse effect on the consolidated financial position or results of operations of the Remaining Group.

For the year ended 31 December 2015 (“FY2015”)

1. Business and financial review

The Remaining Group recorded a turnover of approximately HK$5,354,000 in FY2015. The turnover represented the revenue contributed by the newly acquired water business for the period between the date of acquisition on 23 December 2015 and the financial year ended 31 December 2015. The Remaining Group’s unaudited net loss attributable to the shareholders of the Company in FY2015 was approximately HK$35,716,000. Such loss was mainly due to the huge administrative expenses including salaries and other benefits, legal and professional fee and auditor’s remuneration.

On 23 December 2015, the Remaining Group completed an acquisition of 49% of equity interest in 東莞市擎琿置業有限公司 (Qinghui Properties Limited) and its eight subsidiaries (the “ Qinghui Group ”). The Qinghui Group is principally engaged in water supply business and property investment business and has extensive experience in water supply industry. It maintains a good and long-term working relationship with local government authorities. The Remaining Group has formulated a set of flexible solutions in respect of property investment and capital management. With comprehensive system management, the operation and performance has posed a stable growing trend in a long time.

In respect of property investment and management in FY2015, the Remaining Group had 11 additional properties and lands in Qingyuan City as a result of the acquisition of the Qinghui Group. Among the 11 properties and lands, some of them have been leased out while some of them are retained for self-use. The properties generated steady rental income for the Remaining Group and their fair values continued to increase in FY2015.

– I-9 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2. Business prospect

The Remaining Group will maintain its current operational and management strategy and actively adapt to the new economic condition. The Remaining Group will perform its responsibilities of supplying water effectively and ensure water safety, while continuing to deepen operating ideas. In addition, the Remaining Group will keep abreast of market developments and proactively explore businesses. It will also strive to push its services onto a new level by innovating platforms of services. With all the aforementioned measures, the Remaining Group will take every effort to promote new corporate developments. It is believed that by capitalising on the Remaining Group’s own experience in water supply business and current operations, such new growth sources will continue to deliver results in the upcoming years and contribute steady revenues and profits to the Remaining Group, thereby strengthening the foundation for the Remaining Group’s further development.

3. Cash and bank balances and fixed deposits

As at 31 December 2015, the Remaining Group’s cash and bank balances and fixed deposits amounted to approximately HK$244,867,000. As at 31 December 2015, approximately 67.9% of cash and bank balances was denominated in Renminbi while the remaining portion was mainly denominated in Hong Kong Dollars.

4. Pledged time deposit

As at 31 December 2015, the Remaining Group’s pledged time deposit amounted to approximately HK$281,021,000. Such pledged time deposit was resulted from the cross-guarantee arrangement for cross-border Renminbi settlement on the acquisition of water supply group in FY2015.

5. Bank and other borrowings

As at 31 December 2015, the Remaining Group’s bank and other borrowings amounted to approximately HK$602,170,000. The loan was made under the cross-border guarantee arrangement for cross-border Renminbi settlement on the acquisition of water supply group in FY2015. Details of the loans were as follows:

(i) Secured bank loan of HK$281,021,000 was interest-bearing at 3.1% per annum, repayable within one year and denominated in Renminbi;
(ii) Secured bank loans of HK$58,705,000, HK$8,548,000, HK$16,935,000 and HK$129,257,000 were interest-bearing at 5.65%, 6.15%, 6.72% and 6.765% respectively per annum, repayable after five years and denominated in Renminbi;
(iii) Secured bank loan of HK$102,630,000 was interest-bearing at 6.765% per annum, repayable after five years and denominated in Renminbi;

– I-10 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(iv) Unsecured government loan of HK$1,157,000 was interest-bearing at 3.3% per annum, repayable within one year and denominated in Renminbi;
(v) Unsecured government loan of HK$3,511,000 was interest-bearing at 3.3% per annum, repayable after one year to five years and denominated in Renminbi; and
(vi) Unsecured government loan of HK$406,000 was interest-bearing at 3.3% per annum, repayable after five years and denominated in Renminbi.

6. Liquidity and financial resources

As at 31 December 2015, the Remaining Group had net current liabilities of approximately HK$47,231,000.

As at 31 December 2015, current assets of the Remaining Group comprised inventories of approximately HK$2,364,000, debtors of approximately HK$21,855,000, deposits, prepayments and other receivables of approximately HK$54,110,000, prepaid land lease premium of approximately HK$104,000, fixed deposits of approximately HK$63,218,000, pledged time deposit of approximately HK$281,021,000 and cash and bank balances of approximately HK$181,649,000.

As at 31 December 2015, current liabilities of the Remaining Group comprised bank and other borrowings of approximately HK$354,188,000, trade payables of approximately HK$1,888,000, payable to merchants of approximately HK$3,017,000, deposits received, sundry creditors and accruals of approximately HK$162,058,000, amounts due to related companies of approximately HK$123,796,000 and tax payable of approximately HK$6,605,000.

The gearing ratio (defined as a percentage of total liabilities less deferred tax liability over total assets less deferred tax assets) of the Remaining Group at 31 December 2015 was 55.3%.

7. Employees

As at 31 December 2015, the total number of employees of the Remaining Group was 379. Employees (including directors) are remunerated according to their performance and working experience. On top of basic salaries, discretionary bonus and share options may be granted to eligible employee by reference to the Remaining

– I-11 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Group’s performance as well as the individual’s performance. In addition, the Remaining Group’s also provides social security benefits to its staff such as Mandatory Provident Fund Scheme in Hong Kong and the pension scheme in the PRC.

8. Significant investments, acquisitions and disposals

On 21 June 2015, Shenzhen Huanye Universal Technologies Limited (an indirect wholly-owned subsidiary of the Company) (“ Shenzhen Huanye ”) and Dongguan Hongshun Shiye Development Company Limited (“ Hongshun Shiye ”) entered into the sale and purchase agreement pursuant to which Shenzhen Huanye has conditionally agreed to acquire and Hongshun Shiye conditionally agreed to sell 49% of the entire equity interest in Qinghui Properties Limited and its eight subsidiaries (“ Qinghui Group ”) (the “ Acquisition ”), at cash consideration of RMB224,420,000. Hongshun Shiye is beneficially and wholly-owned by Mr. Yang Zhimao and his spouse Ms. Zhu Fenglian (“ Yangs ”), who also own the entire issued share capital of Ever City Industrial Development Limited, which is a substantial shareholder of the Company. Accordingly, Hongshun Shiye is a connected person of the Company and the Acquisition constitutes a connected transaction of the Company. The acquisition was subsequently approved by the independent shareholders of the Company on 18 December 2015 and completed on 23 December 2015.

9. Charges on the Remaining Group’s assets

The Remaining Group’s bank loans at 31 December 2015 were secured by:

(i) charge over a time deposit amounting to RMB235,420,000 (equivalent to approximately HK$281,021,000);
(ii) charges over property, plant and equipment with aggregate carrying amounts of RMB35,904,000 (equivalent to approximately HK$42,858,000);
(iii) charges over a land use right under service concession arrangement with aggregate carrying amounts of RMB4,355,000 (equivalent to approximately HK$5,198,000);
(iv) pledge of 49% equity interest in Qingyuan Water Supply Development Company Limited;
(v) pledge of 25% equity interest in Qingyuan Qingxin District Taihe Water Company Limited;
(vi) pledge of trade receivables under service concession arrangement with a carrying amount of RMB18,278,000 (equivalent to approximately HK$21,818,000); and
(vii) guarantee by Xinhongcheng Enterprise Management Company Limited and Qingyuan Qingxin District Huike Properties Company Limited, both being the subsidiaries of the Company.

– I-12 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

10. Details of future plans for material investments or capital assets

As at 31 December 2015, a new water treatment plant (Taihe Plant #2 Phase 2) with daily production capacity of approximately 100,000 tonnes was under construction. The Remaining Group intends to expand its coverage area by way of expansion of pipeline coverage.

11. Currency risk

In view of the fact that the Remaining Group’s core business is mainly transacted and settled in Renminbi, the exposure of the Remaining Group’s risk from exchange rate fluctuation was minimal. In FY2015, the Remaining Group did not enter into any arrangement to hedge its foreign currency exposure. However, the management monitors the related foreign currency exposure closely and will consider hedging significant currency exposure should the need arise.

12. Capital Commitment

At 31 December 2015, the Remaining Group’s contracted but not provided for capital commitment included acquisition of property, plant and equipment of approximately HK$137,611,000 and other intangible assets (as defined under the adopted accounting standards) of approximately HK$111,022,000. Such capital commitment is for the expansion of water treatment capacity and pipeline network, as well as the maintenance capital expenditures in the normal course of business of Qingyuan Water Supply Development Company Limited and Qingyuan Qingxin District Taihe Water Company Limited.

13. Contingent Liabilities

– I-13 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

For the year ended 31 December 2014 (“FY2014”)

1. Business and financial review

The Remaining Group did not record turnover in FY2014. However, the Remaining Group owned an investment property in Shanghai with its fair value appreciated in FY2014.

The Remaining Group’s unaudited net profit attributable to the shareholders of the Company in FY2014 was approximately HK$16,307,000. Such profit was mainly due to the gain on disposals of subsidiaries in Universal Enterprise Investment Holdings Limited and Universal Enterprise Resources Limited which were respectively the holding companies of a 6-storey building in Shanghai and the timber business.

2. Business prospect

The Remaining Group had no active business in FY2014 as the water supply business had not yet been formed part of the business of the Remaining Group.

3. Cash and bank balances and fixed deposits

As at 31 December 2014, the Remaining Group’s cash and bank balances and fixed deposits amounted to approximately HK$360,674,000. As at 31 December 2014, approximately 96.5% of cash and bank balances was denominated in Hong Kong Dollars while the remaining portion was mainly denominated in Renminbi.

4. Pledged time deposit

As at 31 December 2014, the Remaining Group had no pledged time deposit.

5. Bank and other borrowings

As at 31 December 2014, the Remaining Group had no bank and other borrowings.

6. Liquidity and financial resources

As at 31 December 2014, the Remaining Group had net current assets of approximately HK$419,582,000.

As at 31 December 2014, current assets of the Remaining Group comprised debtors of approximately HK$1,000, deposits, prepayments and other receivables of approximately HK$91,780,000, prepaid land lease premium of approximately HK$110,000, fixed deposits of approximately HK$338,088,000 and cash and bank balances of approximately HK$22,586,000.

– I-14 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

As at 31 December 2014, current liabilities of the Remaining Group comprised payable to merchants of approximately HK$4,520,000, and deposits received, sundry creditors and accruals of approximately HK$28,463,000.

The gearing ratio (defined as a percentage of total liabilities less deferred tax liability over total assets less deferred tax assets) of the Remaining Group at 31 December 2014 was 6.1%.

7. Employees

As at 31 December 2014, the total number of employees of the Remaining Group was 24. Employees (including directors) are remunerated according to their performance and working experience. On top of basic salaries, discretionary bonus and share options may be granted to eligible employee by reference to the Remaining Group’s performance as well as the individual’s performance. In addition, the Remaining Group’s also provides social security benefits to its staff such as Mandatory Provident Fund Scheme in Hong Kong.

8. Significant investments, acquisitions and disposals

In FY2014, the Remaining Group acquired the entire 100% equity interests in Ease2Pay Limited, a company incorporated in Hong Kong at a cash consideration of HK$1. The fair value of the identifiable assets and liabilities of the subsidiary acquired as at the date of acquisition was HK$10,000. The newly acquired business did not contribute any turnover to the Remaining Group and contributed a loss of HK$1,000 to the Remaining Group for the period between the date of acquisition and at the end of FY2014. The Remaining Group recognised gain on a bargain purchase of HK$10,000 because the fair value of net assets acquired exceeded the purchase consideration.

9. Charges on the Remaining Group’s assets

The Remaining Group had not charge any of its assets as at 31 December 2014.

10. Details of future plans for material investments or capital assets

The Remaining Group had no future plans for material investments or capital assets in FY2014 as the water supply business had not yet been formed part of the business of the Remaining Group.

– I-15 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

11. Currency risk

In FY2014, the Remaining Group did not enter into any arrangement to hedge its foreign currency exposure.

12. Capital Commitment

At 31 December 2014, the Remaining Group had no capital commitment.

13. Contingent Liabilities

For the year ended 31 December 2013 (“FY2013”)

1. Business and financial review

The Remaining Group did not record turnover in FY2013.

The Remaining Group’s unaudited net loss attributable to the shareholders of the Company in FY2013 was approximately HK$33,189,000. Such loss was mainly due to the increase of operating costs and administrative expenses, the charging of fair value of the share-based payment arising from the newly granted share options under the share option scheme of the Company.

2. Business prospect

The Remaining Group had no active business in FY2013 as the water supply business had not yet been formed part of the business of the Remaining Group.

3. Cash and bank balances and fixed deposits

As at 31 December 2013, the Remaining Group’s cash and bank balances and fixed deposits amounted to approximately HK$111,383,000. As at 31 December 2013, approximately 98.8% of cash and bank balances was denominated in Hong Kong Dollars while the remaining portion was mainly denominated in US Dollars.

4. Pledged time deposit

As at 31 December 2013, the Remaining Group had no pledged time deposit.

– I-16 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

5. Bank and other borrowings

As at 31 December 2013, the Remaining Group had no bank and other borrowings.

6. Liquidity and financial resources

As at 31 December 2013, the Remaining Group had net current assets of approximately HK$284,523,000.

As at 31 December 2013, current assets of the Remaining Group comprised debtors of approximately HK$46,756,000, deposits, prepayments and other receivables of approximately HK$216,731,000, tax recoverable of approximately HK$816,000 and cash and bank balances of approximately HK$111,383,000.

As at 31 December 2013, current liabilities of the Remaining Group comprised unsecured bank overdraft of approximately HK$4,241,000, payable to merchants of approximately HK$58,899,000, and deposits received, sundry creditors and accruals of approximately HK$28,023,000.

The gearing ratio (defined as a percentage of total liabilities less deferred tax liability over total assets less deferred tax assets) of the Remaining Group at 31 December 2013 was 16.4%.

The Board considers that the Remaining Group’s financial resources are sufficient to fulfill its commitments, current working capital requirements and further development. In the long term, the Board believes that the Remaining Group will continue to fund its foreseeable expenditures through cash flow from operations. However, for a more massive scale of expansion and development, debt or equity financing may be required.

7. Employees

As at 31 December 2013, the total number of employees of the Remaining Group was 30. Employees (including directors) are remunerated according to their performance and working experience. On top of basic salaries, discretionary bonus and share options may be granted to eligible employee by reference to the Remaining Group’s performance as well as the individual’s performance. In addition, the Remaining Group’s also provides social security benefits to its staff such as Mandatory Provident Fund Scheme in Hong Kong and the pension scheme in the PRC.

8. Significant investments, acquisitions and disposals

There was no significant acquisition and disposal of subsidiaries of the Remaining Group in FY2013.

– I-17 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

9. Charges on the Remaining Group’s assets

The Remaining Group had not charge any of its assets as at 31 December 2013.

10. Details of future plans for material investments or capital assets

On 18 June 2013, the Company entered into the placing agreement (the “ Placing Agreement ”) with Enlighten Securities Limited (the “ Placing Agent ”) whereby the Company conditionally agreed to place, through the Placing Agent, on a best effort basis, a maximum of 200,000,000 placing shares (the “ Placing Shares ”) to not less than six independent placees at a price of HK$0.58 per placing share. The completion of the placing took place on 23 July 2013, whereby a total of 192,000,000 Placing Shares were successfully placed by the Placing Agent to not less than six placees at the placing price pursuant to the terms and conditions of the Placing Agreement. The gross proceeds from the Placing was approximately HK$111.36 million and the net proceeds from the Placing, after deducting the placing commission and other professional fees incurred by the Company in the Placing, was approximately HK$108.58 million. The Remaining Group intends to apply the proceeds for the expansion of business and potential investment opportunities and general working capital.

11. Currency risk

In FY2013, the Remaining Group did not enter into any arrangement to hedge its foreign currency exposure.

12. Capital Commitment

At 31 December 2013, the Remaining Group had no capital commitment.

13. Contingent Liabilities

– I-18 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

Set out below are the unaudited consolidated statements of financial position of the Target Group as at 30 June 2016, 31 December 2015, 2014 and 2013, and the related unaudited consolidated statements of profit or loss and other comprehensive income, the unaudited consolidated statements of changes in equity and the unaudited consolidated statements of cash flows of the Target Group for the six months ended 30 June 2016 and three years ended 31 December 2015 and explanatory notes (the “Unaudited Consolidated Financial Information”).

The Unaudited Consolidated Financial Information has been prepared in accordance with paragraph 14.68(2)(a)(i) of the Listing Rules and the basis of preparation as set out in note 2 to the Financial Information and is solely for the purposes of inclusion in this Circular in connection with the Disposal pursuant to the Disposal Agreement.

The reporting accountant of the Target Group, PKF, was engaged to review the Unaudited Consolidated Financial Information of the Target Group set out on pages II-2 to II-8 of this Circular in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” and with reference to Practice Note 750 “Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable the reporting accountant to obtain assurance that the reporting accountant would become aware of all significant matters that might be identified in an audit. Accordingly, the reporting accountant does not express an audit opinion.

Based on the review, nothing has come to the reporting accountant’s attention that causes them to believe that the Unaudited Consolidated Financial Information of the Target Group is not prepared, in all material respects, in accordance with the basis of preparation set out in note 2 to the Financial Information.

– II-1 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

UNAUDITED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Revenue Cost of services rendered Gross profit Other revenue Other income General and administrative expenses Profit/(loss) from operations Gain on bargain purchase Increase/(decrease) in fair value of investment properties Impairment loss on debtors Impairment loss on other receivables Impairment loss on intangible assets Impairment loss on goodwill Share of results of an associate Finance costs Profit/(loss) before income tax Income tax expense Profit/(loss) for the year/ period Attributable to:– Owners of the Company Non-controlling interests Profit/(loss) for the year/ period	Year ended 31 December 2013 2014 2015 HK$’000 HK$’000 HK$’000 151,602 278,566 219,031 (3,593) (3,379) (77) 148,009 275,187 218,954 14,616 11,672 13,005 1,680 1,493 698 (128,367) (242,714) (255,829) 35,938 45,638 (23,172) – – – 2,979 (101) 174 (1,630) (40) (58) (613) (200) – – (8,796) – (1) – – – – (3) (654) (609) (2,907) 36,019 35,892 (25,966) (9,773) (9,646) (1,475) 26,246 26,246 (27,441) 17,025 21,206 (22,787) 9,221 5,040 (4,654) 26,246 26,246 (27,441)	Six months ended 30 June 2015 2016 HK$’000 HK$’000 142,028 87,172 (13) (111) 142,015 87,061 2,509 2,886 127 25 (146,603) (124,720) (1,952) (34,748) – 166 – – (57) (37) – (552) – – – – – (33) (665) (1,725) (2,674) (36,929) (1,720) (139) (4,394) (37,068) (3,991) (25,663) (403) (11,405) (4,394) (37,068)

– II-2 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

Six months ended Year ended 31 December 30 June 2013 2014 2015 2015 2016 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Other comprehensive

income/(loss):–

Item that may be reclassified subsequently to profit or loss:–

Exchange differences arising on translation of:– – financial statements of subsidiaries established in the People’s Republic of China (the “PRC”) – financial statements of an associate established in the PRC Other comprehensive income/ (loss) for the year/period, net of tax Total comprehensive income/ (loss) for the year/period Total comprehensive income/ (loss) attributable to: Owners of the Company Non-controlling interests	9,218 – 9,218 35,464 24,717 10,747 35,464	(8,313) – (8,313) 17,933 13,223 4,710 17,933	(9,481) (68) (9,549) (36,990) (29,863) (7,127) (36,990)	537 – 537 (3,857) (3,666) (191) (3,857)	(5,213) (640) (5,853) (42,921) (31,095) (11,826) (42,921)

– II-3 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

NON-CURRENT ASSETS Property, plant and equipment Prepaid land lease premium Investment properties Intangible assets Goodwill Interest in an associate Deferred tax assets Loan to an officer Deposit paid for acquisition of property, plant and equipment Prepayments and other receivables CURRENT ASSETS Inventories Debtors Deposits, prepayments and other receivables Financial assets at fair value through profit or loss Prepaid land lease premium Tax recoverable Amounts due from fellow subsidiaries Cash and bank balances	As at 31 December 2013 2014 2015 HK$’000 HK$’000 HK$’000 23,342 29,547 21,928 3,576 6,215 5,704 21,409 11,031 10,612 18,444 4,250 3,977 76,402 77,097 77,097 – – 29,542 – 146 202 – 12,362 – – – 23,373 – 5,037 227 143,173 145,685 172,662 973 1,502 647 127,813 65,655 69,704 34,212 145,960 205,862 1,794 221 1,647 98 190 180 816 – – 171,613 113,835 61,901 483,165 489,637 456,122 820,484 817,000 796,063	As at 30 June 2016 HK$’000 20,631 5,492 55,016 3,895 77,097 28,869 197 – 22,866 38,255
		252,318
		636 82,056 195,640 2,018 176 – 61,276 454,840
		796,642

– II-4 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

DEDUCT: CURRENT LIABILITIES Bank overdraft, unsecured Bank and other borrowings Payable to merchants Deposits received, sundry creditors and accruals Amounts due to fellow subsidiaries Tax payable NET CURRENT ASSETS/ (LIABILITIES) TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITY Deferred tax liabilities NET ASSETS REPRESENTING:– CAPITAL AND RESERVES Share capital Reserves TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY NON-CONTROLLING INTERESTS TOTAL EQUITY	As at 31 December 2013 2014 2015 HK$’000 HK$’000 HK$’000 4,241 – – – – 59,685 364,188 418,355 409,827 53,928 70,752 93,617 218,574 127,677 109,719 6,170 11,057 6,354 647,101 627,841 679,202 173,383 189,159 116,861 316,556 334,844 289,523 799 550 563 799 550 563 315,757 334,294 288,960 97,860 101,540 101,540 162,692 172,235 120,321 260,552 273,775 221,861 55,205 60,519 67,099 315,757 334,294 288,960	As at 30 June 2016 HK$’000 – 63,119 507,031 116,242 108,683 7,138 802,213 (5,571) 246,747 551 551 246,196 101,540 89,226 190,766 55,430 246,196

– II-5 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

At 1.1.2013 Total comprehensive income for the year Transferred to statutory reserve At 31.12.2013 and 1.1.2014 Acquisition of a subsidiary Total comprehensive (loss)/income for the year Transferred to statutory reserve Transition of no-par value regime At 31.12.2014 and 1.1.2015 Change in ownership interests in a subsidiary that do not result in a loss of control Dividend paid to non-controlling shareholder of a subsidiary Total comprehensive loss for the year Transferred to statutory reserve At 31.12.2015 and 1.1.2016 Acquisitions of subsidiaries Total comprehensive loss for the period Transferred to statutory reserve At 30.6.2016 At 1.1.2015 Total comprehensive income/(loss) for the period Transferred to statutory reserve At 30.6.2015	Share capital HK$’000 97,860 – – 97,860 – – – 3,680 101,540 – – – – 101,540 – – – 101,540 101,540 – – 101,540	Share premium HK$’000 3,680 – – 3,680 – – – (3,680) – – – – – – – – – – – – – –	Exchange reserve HK$’000 19,819 7,692 – 27,511 – (7,983) – – 19,528 – – (7,076) – 12,452 – (5,432) – 7,020 19,528 325 – 19,853	Statutory reserve HK$’000 16,008 – 5,895 21,903 – – 4,044 – 25,947 – – – 4,297 30,244 – – 499 30,743 25,947 – 760 26,707	Other reserve HK$’000 28,270 – – 28,270 – – – – 28,270 162 – – – 28,432 – – – 28,432 28,270 – – 28,270	Retained profits HK$’000 70,198 17,025 (5,895) 81,328 – 21,206 (4,044) – 98,490 – (22,213) (22,787) (4,297) 49,193 – (25,663) (499) 23,031 98,490 (3,991) (760) 93,739	Total Non- controlling interests HK$’000 HK$’000 235,835 44,458 24,717 10,747 – – 260,552 55,205 – 604 13,223 4,710 – – – – 273,775 60,519 162 13,707 (22,213) – (29,863) (7,127) – – 221,861 67,099 – 157 (31,095) (11,826) – – 190,766 55,430 273,775 60,519 (3,666) (191) – – 270,109 60,328	Total equity HK$’000 280,293 35,464 –
								315,757 604 17,933 – –
								334,294 13,869 (22,213) (36,990) –
								288,960 157 (42,921) –
								246,196

								334,294 (3,857) –
								330,437

– II-6 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

CASH FLOWS FROM OPERATING ACTIVITIES Profit/(loss) before income tax Adjustments for:– Interest on bank deposits Other interest income Interest expenses Dividend income from investments Depreciation Amortisation of prepaid land lease premium Amortisation of intangible assets Share of results of an associate Loss on disposal of property, plant and equipment (Increase)/decrease in fair value of investment properties Loss on disposal of investment properties Loss/(gain) on change in fair value of financial assets at fair value through profit or loss (Gain)/loss on disposal of financial assets at fair value through profit or loss Impairment loss on debtors Impairment loss on other receivables Impairment loss on intangible assets Impairment loss on goodwill Write-down of inventories Gain on bargain purchase Operating profit/(loss) before working capital changes Increase in inventories (Increase)/decrease in debtors Decrease/(increase) in deposits, prepayments and other receivables (Increase)/decrease in amounts due from fellow subsidiaries Increase/(decrease) in payable to merchants Increase in deposits received, sundry creditors and accruals (Increase)/decrease in loan to an officer Decrease in amounts due to fellow subsidiaries Cash (used in)/generated from operations Bank interest received Tax (paid)/refund NET CASH (USED IN)/FROM OPERATING ACTIVITIES	Year ended 31 December 2013 2014 2015 HK$’000 HK$’000 HK$’000 36,019 35,892 (25,966) (8,360) (8,212) (4,801) (29) – (29) 4,942 – 2,390 – (108) – 12,219 23,381 17,766 97 105 188 650 4,764 198 – – 3 397 2,127 418 (2,979) 101 (174) – 3,177 – 724 (101) 85 (247) (1,377) (524) 1,630 40 58 613 200 – – 8,796 – 1 – – – 660 883 – – – 45,677 69,445 (9,505) (429) (233) (28) (42,610) 62,118 (4,107) 29,951 (115,841) (56,267) (171,613) 75,892 51,934 116,309 54,167 (8,528) 16,825 7,734 22,865 – (12,362) 12,362 (23,179) (90,897) (17,958) (29,069) 50,023 (9,232) 8,360 8,212 4,801 (6,091) (4,869) (5,936) (26,800) 53,366 (10,367)	Six months ended 30 June 2015 2016 HK$’000 HK$’000 (2,674) (36,929) (2,377) (2,884) (6) – 409 1,575 – (2) 9,590 4,055 95 90 101 103 – 33 56 – – – – – (109) 115 – 400 57 37 – 552 – – – – 531 271 – (166) 5,673 (32,750) (29) (260) 5,263 (12,389) (175,828) (26,555) 49,650 625 36,522 97,204 (11,685) 5,223 12,362 – (15,109) (1,036) (93,181) 30,062 2,377 2,884 (6,033) 694 (96,837) 33,640	Six months ended 30 June 2015 2016 HK$’000 HK$’000 (2,674) (36,929) (2,377) (2,884) (6) – 409 1,575 – (2) 9,590 4,055 95 90 101 103 – 33 56 – – – – – (109) 115 – 400 57 37 – 552 – – – – 531 271 – (166) 5,673 (32,750) (29) (260) 5,263 (12,389) (175,828) (26,555) 49,650 625 36,522 97,204 (11,685) 5,223 12,362 – (15,109) (1,036) (93,181) 30,062 2,377 2,884 (6,033) 694 (96,837) 33,640
			(32,750) (260) (12,389) (26,555) 625 97,204 5,223 – (1,036)
			30,062 2,884 694
			33,640

– II-7 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

CASH FLOWS FROM INVESTING ACTIVITIES Dividend received from investments Other interest income received Payments to acquire property, plant and equipment Proceeds from disposal of property, plant and equipment Payment to prepaid land lease premium Payments to acquire investment properties Payments to acquire intangible assets Deposit paid for acquisition of property, plant and equipment Payments to acquire financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Capital injection into an associate Net cash (outflow)/inflow from acquisitions of subsidiaries Net cash inflow arising on disposal of a subsidiary Proceeds from disposal of partial interests in a subsidiary NET CASH USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from new bank and other borrowings Repayment of bank and other borrowings Interest paid Dividend paid to non-controlling shareholder of a subsidiary NET CASH (USED IN)/FROM FINANCING ACTIVITIES NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS EFFECT OF FOREIGN EXCHANGE RATE CHANGES, NET CASH AND CASH EQUIVALENTS AT 1 JANUARY CASH AND CASH EQUIVALENTS AT 31 DECEMBER/30 JUNE ANALYSIS OF CASH AND CASH EQUIVALENTS Cash and bank balances Bank overdraft, unsecured	Year ended 31 December 2013 2014 2015 HK$’000 HK$’000 HK$’000 – 108 – 29 – 29 (5,051) (32,696) (12,110) 30 866 496 – (2,860) – – – – (2,106) (574) – – – (23,373) – (2,393) (16,032) 2,741 5,434 14,974 – – (29,613) – (2,667) – – – 1,246 – – 14,147 (4,357) (34,782) (50,236) – – 119,370 – – (59,685) (4,942) – (2,390) – – (22,213) (4,942) – 35,082 (36,099) 18,584 (25,521) 6,640 (7,871) (7,994) 508,383 478,924 489,637 478,924 489,637 456,122 483,165 489,637 456,122 (4,241) – – 478,924 489,637 456,122	Six months ended 30 June 2015 2016 HK$’000 HK$’000 – 2 6 – (5,260) (3,248) 104 – – – – (28,757) – (49) (20,823) – – (25,971) – 25,042 – – – 103 1,246 – – – (24,727) (32,878) 63,244 64,345 – (59,924) (409) (1,575) – – 62,835 2,846 (58,729) 3,608 240 (4,890) 489,637 456,122 431,148 454,840 431,148 454,840 – – 431,148 454,840	Six months ended 30 June 2015 2016 HK$’000 HK$’000 – 2 6 – (5,260) (3,248) 104 – – – – (28,757) – (49) (20,823) – – (25,971) – 25,042 – – – 103 1,246 – – – (24,727) (32,878) 63,244 64,345 – (59,924) (409) (1,575) – – 62,835 2,846 (58,729) 3,608 240 (4,890) 489,637 456,122 431,148 454,840 431,148 454,840 – – 431,148 454,840
			(32,878)
			64,345 (59,924) (1,575) –
			2,846
			3,608 (4,890) 456,122
			454,840

			454,840 –
			454,840

– II-8 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL INFORMATION

1. GENERAL INFORMATION

On 2 November 2016, Universal Cyberworks International Ltd. (the “Vendor”), a subsidiary of Universal Technologies Holdings Limited (the “Company”), entered into a sale and purchase agreement with Brilliant Dragon Investment Limited (the “Purchaser”), pursuant to which the Vendor conditionally agreed to dispose of 51% equity interests in International Payment Solutions Holdings Limited (the “Target Company”) and its subsidiaries (collectively referred to as the “Target Group”) and Net Shareholders Loans (the “Disposal”) at cash consideration of HK$158 million.

The Target Company is a limited liability company incorporated in Hong Kong on 9 January 2002 with issued share capital of HK$101,540,000. As at the date of this Circular, the Target Company is owned as to 51% by the Vendor and 49% by H and R Group Limited, a company incorporated in the British Virgin Islands.

2. BASIS OF PREPARATION

The Unaudited Consolidated Financial Information has been prepared in accordance with the accounting policies adopted by the Company as shown in its annual report for the year ended 31 December 2015 and Rule 14.68(2)(a)(i) of the Listing Rules. The Unaudited Consolidated Financial Information is prepared by the Directors solely for the purpose of inclusion in this Circular.

The Unaudited Consolidated Financial Information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 (Revised) “Presentation of Financial Statements” or an interim financial report as defined in Hong Kong Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants and should be read in connection with the relevant published annual report of the Company for the Relevant Periods.

– II-9 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

A. UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF THE REMAINING GROUP

Introduction

The following is a summary of an illustrative and the unaudited pro forma consolidated statement of financial position, the unaudited pro forma consolidated statement of profit or loss and other comprehensive income, the unaudited pro forma consolidated statement of cash flows of the Remaining Group (the “Unaudited Pro Forma Consolidated Financial Information”), which have been prepared on the basis of the notes set out below for the purpose of illustrating the effects of the Disposal on (a) the financial position of the Remaining Group as if the Disposal had been completed on 30 June 2016; and (b) the results and cash flows of the Remaining Group as if the Disposal had been completed on 1 January 2015. Capitalised terms used herein, unless otherwise defined, shall have the same meanings as those defined in the Circular.

The Unaudited Pro Forma Consolidated Financial Information of the Remaining Group has been prepared by the Directors of the Company in accordance with paragraphs 4.29 and 14.68(2)(a)(ii) of the Listing Rules for illustrative purposes only, based on their judgments, estimations and assumptions, and because of its hypothetical nature, it may not give a true picture of the financial position of the Remaining Group as at 30 June 2016 or at any future date had the Disposal been completed on 30 June 2016 or the results and cash flows of the Remaining Group for the year ended 31 December 2015 or for any future period had the Disposal been completed on 1 January 2015.

The Unaudited Pro Forma Consolidated Financial Information is prepared based on the unaudited condensed consolidated statement of financial position of the Group as at 30 June 2016, as set out in its published interim report for the period ended 30 June 2016. The audited consolidated statement of profit or loss and other comprehensive income and the audited consolidated statement of cash flows of the Group for the year ended 31 December 2015 are extracted from the audited consolidated financial statements of the Group for the year ended 31 December 2015, after giving effect to the pro forma adjustments relating to the Disposal as described in the accompanying notes. Narrative description of the pro forma adjustments that are (i) directly attributable to the transactions and not relating to future events or decisions; and (ii) factually supported, is summarised in the accompanying notes.

The Unaudited Pro Forma Consolidated Financial Information is based on a number of assumptions, estimates, and uncertainties. Accordingly, the Unaudited Pro Forma Consolidated Financial Information does not purport to describe the actual financial position, results and cash flows of the Remaining Group that would have been attained had the Disposal been completed on 30 June 2016 and 1 January 2015, respectively. The Unaudited Pro Forma Consolidated Financial Information does not purport to predict future financial positions or results of the Remaining Group.

– III-1 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Unaudited pro forma consolidated statement of financial position of the Remaining Group as at 30 June 2016

NON-CURRENT ASSETS Property, plant and equipment Prepaid land lease premium Investment properties Intangible assets Goodwill Interest in an associate Deferred tax assets Deposit paid for acquisition of property, plant and equipment Prepayments and other receivable CURRENT ASSETS Inventories Debtors Deposits, prepayments and other receivables Financial assets at fair value through profit or loss Prepaid land lease premium Amounts due from fellow subsidiaries Fixed deposits Pledged time deposit Cash and bank balances	The Group HK$’000 Note 2 492,372 28,559 97,314 392,351 167,387 28,869 197 36,962 38,255 1,282,266 3,314 99,152 204,190 2,018 278 – 47,132 274,912 703,731 1,334,727	Pro forma adjustments The Remaining Group HK$’000 HK$’000 HK$’000 Note 3 Note 5 (20,631) 471,741 (5,492) 23,067 (55,016) 42,298 (3,895) 388,456 (77,097) 90,290 (28,869) – (197) – (22,866) 14,096 (38,255) – (252,318) 1,029,948 (636) 2,678 (82,056) 17,096 (195,640) 8,550 (2,018) – (176) 102 (61,276) 61,276 – – 47,132 – 274,912 (454,840) 158,000 406,891 (796,642) 757,361	Pro forma adjustments The Remaining Group HK$’000 HK$’000 HK$’000 Note 3 Note 5 (20,631) 471,741 (5,492) 23,067 (55,016) 42,298 (3,895) 388,456 (77,097) 90,290 (28,869) – (197) – (22,866) 14,096 (38,255) – (252,318) 1,029,948 (636) 2,678 (82,056) 17,096 (195,640) 8,550 (2,018) – (176) 102 (61,276) 61,276 – – 47,132 – 274,912 (454,840) 158,000 406,891 (796,642) 757,361
			1,029,948
			2,678 17,096 8,550 – 102 – 47,132 274,912 406,891
			757,361

– III-2 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

CURRENT LIABILITIES Bank and other borrowings Trade payables Payable to merchants Deposits received, sundry creditors and accruals Amounts due to related companies Amounts due to fellow subsidiaries Tax payable NET CURRENT ASSETS/ (LIABILITIES) TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Bank and other borrowings Deferred tax liabilities NET ASSETS CAPITAL AND RESERVES SHARE CAPITAL RESERVES EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY Non-controlling interests TOTAL EQUITY	The Group HK$’000 Note 2 390,987 1,899 510,044 285,059 73,908 – 10,613 1,272,510 62,217 1,344,483 424,095 65,055 489,150 855,333 21,205 470,770 491,975 363,358 855,333	Pro forma adjustments HK$’000 HK$’000 Note 3 Note 5 (63,119) – (507,031) (116,242) 3,008 – (108,683) 108,683 (7,138) 7,784 (802,213) 5,571 (246,747) – (551) (551) (246,196) (101,540) 101,540 (89,226) 91,736 (190,766) (55,430) (93,475) (246,196)	The Remaining Group HK$’000 327,868 1,899 3,013 171,825 73,908 – 11,259
			589,772
			167,589
			1,197,537
			424,095 64,504
			488,599
			708,938

			21,205 473,280
			494,485 214,453
			708,938

– III-3 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Unaudited pro forma consolidated statement of profit or loss and other comprehensive income of the Remaining Group for the year ended 31 December 2015

Revenue Cost of sales/service rendered Gross profit Other revenue Other income General and administrative expenses Loss from operations Increase in fair value of investment properties Impairment loss on debtors Estimated loss on the Disposal Share of results of an associate Finance costs Loss before income tax Income tax expense Loss for the year Attributable to:– Shareholders of the Company Non-controlling interests Loss for the year	The Group HK$’000 Note 2 224,417 (3,514) 220,903 16,564 1,009 (294,607) (56,131) 1,206 (58) – (3) (5,428) (60,414) (2,134) (62,548) (44,412) (18,136) (62,548)	Pro forma adjustments The Remaining Group HK$’000 HK$’000 HK$’000 Note 6 Note 7 (219,031) 5,386 77 (3,437) (218,954) 1,949 (13,005) 3,559 (698) 311 255,829 (38,778) 23,172 (32,959) (174) 1,032 58 – – (6,259) (6,259) 3 – 2,907 (2,521) 25,966 (40,707) 1,475 (659) 27,441 (41,366) 22,787 (6,259) (27,884) 4,654 (13,482) 27,441 (41,366)

– III-4 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

			The
The	Pro	forma	Remaining
Group	adjustments		Group
HK$’000	HK$’000	HK$’000	HK$’000
Note 2	Note 6	Note 7

Other comprehensive (loss)/ income:– Items that may be reclassified subsequently to profit or loss:– Exchange differences arising on translation of financial statements of subsidiaries established in the People’s Republic of China (the “PRC”) Exchange differences arising on translation of financial statements of an associate established in the PRC Total comprehensive loss attributable to:– Shareholders of the Company Non-controlling interests	(22,374) (68) (22,442) (84,990) (49,242) (35,748) (84,990)	9,481 68 9,549 36,990 29,863 (6,259) 7,127 36,990	(12,893) –
			(12,893)
			(54,259)

			(25,638) (28,621)
			(54,259)

– III-5 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Unaudited pro forma consolidated statement of cash flows of the Remaining Group for the year ended 31 December 2015

CASH FLOWS FROM OPERATING ACTIVITIES (Loss)/profit before income tax Adjustments for:– Interest on bank deposits Other interest income Interest expenses Depreciation Amortisation of prepaid land lease premium Amortisation of intangible assets Increase in fair value of investment properties Share of results of an associate Loss on disposal of property, plant and equipment Loss on change in fair value of financial assets at fair value through profit or loss Gain on disposal of financial assets at fair value through profit or loss Estimated loss on the Disposal Bad debts written off Impairment loss on debtors Write-down of inventories Operating (loss)/profit before working capital changes Increase in inventories Decrease in debtors Decrease in deposits, prepayments and other receivables Decrease in amount dues from fellow subsidiaries Increase in trade payables Increase/(decrease) in payable to merchants Increase in deposits received, sundry creditors and accruals Increase/(decrease) in loan to an officer Increase in amounts due to fellow subsidiaries Decrease in amount due to a related company Cash (used in)/generated from operations Bank interest received Tax paid NET CASH (USED IN)/FROM OPERATING ACTIVITIES	The Group HK$’000 Note 2 (60,414) (8,360) (29) 4,874 19,611 302 477 (1,206) 3 590 85 (524) – 126 58 883 (43,524) (34) (7,367) 11,031 – (19) (10,031) 34,960 12,362 – (17,288) (19,910) 8,360 (5,936) (17,486)	Pro forma adjustments HK$’000 HK$’000 Note 8 Notes 7 & 9 25,966 (6,259) 4,801 29 (2,390) (17,766) (188) (198) 174 (3) (418) (85) 524 – 6,259 – (58) (883) 9,505 28 4,107 56,267 (51,934) – 8,528 (22,865) (12,362) 17,958 – 9,232 (4,801) 5,936 10,367	The Remaining Group HK$’000 (40,707) (3,559) – 2,484 1,845 114 279 (1,032) – 172 – – 6,259 126 – – (34,019) (6) (3,260) 67,298 (51,934) (19) (1,503) 12,095 – 17,958 (17,288) (10,678) 3,559 – (7,119)

– III-6 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

CASH FLOWS FROM INVESTING ACTIVITIES Other interest income received Payments to acquire property, plant and equipment Proceeds from disposal of property, plant and equipment Payments to acquire intangible assets Deposit paid for acquisition of property, plant and equipment Capital injection into an associate Payments to acquire financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Net cash outflow arising on acquisition of a subsidiary Net cash inflow/(outflow) arising on disposals of subsidiaries Proceeds from disposal of partial interest in a subsidiary NET CASH (USED IN)/FROM INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from shares issued under share option scheme Proceeds from new bank loans Increase in pledged time deposit Interest paid Return of pledged time deposit Repayment of bank loan, secured NET CASH FROM/(USED IN) FINANCING ACTIVITIES NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS EFFECT OF FOREIGN EXCHANGE RATE CHANGES, NET CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT END OF THE YEAR	The Group HK$’000 Note 2 29 (22,083) 501 (431) (23,373) (29,613) (16,032) 14,974 (119,374) 1,246 14,147 (180,009) 23,250 400,391 (281,021) (4,942) (59,685) (11,328) 66,665 (130,830) (18,491) 850,310 700,989	Pro forma adjustments HK$’000 HK$’000 Note 8 Notes 7 & 9 (29) 12,110 (496) – 23,373 29,613 16,032 (14,974) – (1,246) (331,637) (14,147) 50,236 – (119,370) – 2,390 59,685 22,213 (35,082) 25,521 7,994 (489,637) 489,637 (456,122)	The Remaining Group HK$’000 – (9,973) 5 (431) – – – – (119,374) (331,637) – (461,410) 23,250 281,021 (281,021) (2,552) – 10,885 31,583 (436,946) (10,497) 850,310 402,867

– III-7 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Notes:

On 2 November 2016, Universal Cyberworks International Ltd. (the “Vendor”), a subsidiary of Universal Technologies Holdings Limited (the “Company”), has entered into a sale and purchase agreement with Brilliant Dragon Investment Limited (the “Purchaser”), pursuant to which the Vendor conditionally agreed to dispose of 51% equity interests in International Payment Solutions Holdings Limited (the “Target Company”) and its subsidiaries (collectively referred to as the “Target Group”) and the Net Shareholders Loans (defined in Note 4) to the Purchaser (the “Disposal”) at cash consideration of HK$158,000,000.
The amounts are extracted from the unaudited condensed consolidated statement of financial position of the Group as at 30 June 2016 as set out in the published interim report of the Company for the six months ended 30 June 2016. The audited consolidated statement of profit or loss and other comprehensive income and the audited consolidated statement of cash flows of the Group are extracted from the audited consolidated financial statements of the Group as set out in its annual report for the year ended 31 December 2015.
The adjustment reflects the exclusion of the assets and liabilities of the Target Group as at 30 June 2016, which is extracted from the unaudited consolidated statement of financial position of the Target Group as at 30 June 2016, as set out in Appendix II to this Circular assuming the Disposal had been taken place on 30 June 2016.
Net Shareholders Loans represent the net amount of amount due from relevant members of the Remaining Group to relevant members of the Target Group of approximately HK$61,276,000 and amount due from relevant members of the Target Group to relevant members of the Remaining Group of approximately HK$108,683,000 respectively as at 30 June 2016 which are extracted from the unaudited consolidated statement of financial position of the Target Group as at 30 June 2016, as set out in Appendix II to this Circular, assuming the Disposal had been taken place on 30 June 2016.
The adjustment reflects the estimated result on the Disposal as if the Disposal had been taken place on 30 June 2016. The calculation of the estimated gain on the Disposal is as follows:–

Total consideration for the Disposal Less: Net Shareholders Loans as at 30 June 2016 (Note 4) Less: Net assets of the Target Group attributable to the Company as at 30 June 2016 (Note 5(i)) Less: Estimated capital gain tax (Note 5(ii)) Less: Estimated direct expenses in relation to the Disposal (Note 5(ii)) Estimated gain on the Disposal as at 30 June 2016	HK$’000 158,000 (47,407) (97,291) (7,784) (3,008) 2,510

i. The amount represents 51% of total equity attributable to owners of the Target Group as at 30 June 2016 extracted from the unaudited consolidated statement of financial position of the Target Group as at 30 June 2016, as set out in Appendix II to this Circular.
ii. These adjustments represent the estimated expenses directly attributable to the Disposal. This includes estimated legal and professional fees and other expenses of approximately HK$3,008,000 and estimated withholding capital gain tax approximately HK$7,784,000 respectively. The withholding capital gain tax liability is estimated by the Directors based on the applicable tax rates of withholding capital gain tax levied by the China tax bureau arising from the Disposal.

– III-8 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

The adjustment reflects the exclusion of the revenue, cost of sales/services rendered, income and expenses of the Target Group for the year ended 31 December 2015, which is extracted from the unaudited consolidated statement of profit or loss and other comprehensive income of the Target Group for the year ended 31 December 2015 as set out in Appendix II to the Circular, assuming the Disposal had been taken place on 1 January 2015.
The adjustment reflects the estimated result on the Disposal as if the Disposal had been taken place on 1 January 2015. The calculation of the estimated loss on the Disposal is as follows:–

Total consideration for the Disposal Less: Net Shareholders Loans as at 1 January 2015 (Note 7(i)) Less: Net assets of the Target Group attributable to the Company as at 1 January 2015 (Note 7(ii)) Less: Estimated capital gain tax (Note 7(iii)) Less: Estimated direct expenses in relation to the Disposal (Note 7(iii)) Estimated loss on the Disposal as at 1 January 2015	HK$’000 158,000 (13,842) (139,625) (7,784) (3,008) (6,259)

i. Net Shareholder Loans represent the net amount of amount due from relevant members of the Remaining Group to relevant members of the Target Group of approximately HK$113,835,000 and due from relevant amount of the Target Group to relevant members of the Remaining Group of approximately HK$127,677,000 respectively as at 1 January 2015 which are extracted from the unaudited consolidated statement of financial position of the Target Group as at 1 January 2015, as set out in Appendix II to this Circular, assuming the Disposal had been taken place on 1 January 2015.
ii. The amount represents 51% of total equity attributable to owners of the Target Group as at 1 January 2015 extracted from the unaudited consolidated statement of financial position of the Target Group as at 1 January 2015, as set out in Appendix II to this Circular.
iii. These adjustments represent the estimated expenses directly attributable to the Disposal. This includes estimated legal and professional fees and other expenses of approximately HK$3,008,000 and estimated withholding capital gain tax approximately HK$7,784,000 respectively. The withholding capital gain tax liability is estimated by the Directors based on the applicable tax rates of withholding capital gain tax levied by the China tax bureau arising from the Disposal.
The adjustment, which is extracted from the unaudited consolidated statement of cash flows of the Target Group for the year ended 31 December 2015 as set out in Appendix II to the Circular, represents the exclusion of cash flows of the Target Group as if the Disposal had been completed on 1 January 2015.
The adjustment represents the net cash outflow as if the Disposal had been completed on 1 January 2015, being cash consideration of HK$158,000,000 offset by cash and cash equivalents of the Target Group disposed of approximately HK$489,637,000.
No adjustment has been made to reflect any trading results or other transactions of the Group entered into subsequent to 30 June 2016 for the unaudited pro forma consolidated statement of financial position and 31 December 2015 for the unaudited pro forma consolidated statement of profit or loss and other comprehensive income and unaudited pro forma consolidated statement of cash flows.
All the above pro forma adjustments to the unaudited pro forma consolidated statement of profit or loss and other comprehensive income and the unaudited pro forma consolidated statement of cash flows are not expected to have a continuing effect on the Remaining Group.

– III-9 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

B. INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The following is the text of a report received from the reporting accountants of the Company, PKF, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

大信梁學濂（香港）會計師事務所

Accountants & business advisers

26/F, Citicorp Centre 18 Whitfield Road Causeway Bay Hong Kong

30 November 2016

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF PRO FORMA FINANCIAL INFORMATION

To the directors of Universal Technologies Holdings Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma consolidated financial information of Universal Technologies Holdings Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) by the directors of the Company (the “Directors”) for illustrative purposes only. The unaudited pro forma consolidated financial information consists of the unaudited pro forma consolidated statement of financial position as at 30 June 2016, the unaudited pro forma consolidated statement of profit or loss and other comprehensive income and the unaudited pro forma consolidated statement of cash flows for the year ended 31 December 2015 and related notes (the “Unaudited Pro Forma Consolidated Financial Information”) as set out in Part A of Appendix III to the circular dated 30 November 2016 (the “Circular”) issued by the Company. The applicable criteria on the basis of which the Directors have compiled the Unaudited Pro Forma Consolidated Financial Information are described in the relevant notes.

The Unaudited Pro Forma Consolidated Financial Information has been compiled by the Directors to illustrate the impact of the Disposal (as defined in the Circular) on the Group’s financial position as at 30 June 2016 as if the Disposal had taken place on 30 June 2016, and the Group’s financial performance and cash flows for the year ended 31 December 2015 as if the Disposal had taken place on 1 January 2015 respectively. As part of this process, information about the Group’s financial position has been extracted by the Directors from the Group’s interim report for the period ended 30 June 2016, on which a

– III-10 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

review report has been published, and the Group’s financial performance and cash flows has been extracted by the Directors from the Group’s financial statements for the year ended 31 December 2015, on which an audit report has been published.

Directors’ responsibilities for the Unaudited Pro Forma Consolidated Financial Information

The Directors are responsible for compiling the Unaudited Pro Forma Consolidated Financial Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” (“AG 7”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

Our independence and quality control

We have complied with the independence and other ethical requirements of the “Code of Ethics for Professional Accountants”issued by the HKICPA, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

Our firm applies Hong Kong Standard on Quality Control 1 “Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements”, and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting accountants’ responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the Unaudited Pro Forma Consolidated Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Consolidated Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements (“HKSAE”) 3420 “Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus” issued by the HKICPA. This standard requires that the reporting accountant plans and performs procedures to obtain reasonable assurance about whether the Directors have compiled the Unaudited Pro Forma Consolidated Financial Information in accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the HKICPA.

– III-11 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

For purpose of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the Unaudited Pro Forma Consolidated Financial Information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the Unaudited Pro Forma Consolidated Financial Information.

The purpose of the Unaudited Pro Forma Consolidated Financial Information included in the circular is solely to illustrate the impact of the Disposal on unadjusted financial information of the Group as if the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the transaction at 30 June 2016 for the Group’s financial position and 1 January 2015 for the Group’s financial statement and cash flows would have been as presented.

A reasonable assurance engagement to report on whether the Unaudited Pro Forma Consolidated Financial Information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the Directors in the compilation of the Unaudited Pro Forma Consolidated Financial Information provide a reasonable basis for presenting the significant effects directly attributable to the transaction, and to obtain sufficient appropriate evidence about whether:

the related pro forma adjustments give appropriate effect to those criteria; and
the Unaudited Pro Forma Consolidated Financial Information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgement, having regard to the reporting accountants’ understanding of the nature of the Group, the transaction in respect of which the Unaudited Pro Forma Consolidated Financial Information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the Unaudited Pro Forma Consolidated Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion:

a) the Unaudited Pro Forma Consolidated Financial Information has been properly compiled on the basis stated;
b) such basis is consistent with the accounting policies of the Group; and

– III-12 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Consolidated Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Yours faithfully,

PKF

Certified Public Accountants 26/F, Citicorp Centre 18 Whitfield Road Causeway Bay, Hong Kong

– III-13 –

VALUATION REPORT ON THE TARGET GROUP

APPENDIX IV

The following is the text of a letter and valuation certificate, prepared for the purpose of incorporation in this circular received from Graval Consulting Limited, the Independent Valuer, in connection with its valuation as at 30 June 2016 of the Target Group.

==> picture [131 x 75] intentionally omitted <==

Graval Consulting Limited Suite 1702, 17/F, Chinachem Tower, No. 34-37 Connaught Road Central, Hong Kong.

30 November 2016

Universal Technologies Holdings Limited Room A & B2 11/F, Guangdong Investment Tower 148 Connaught Road Central, Sheung Wan Hong Kong

Dear Sirs/Madams,

In accordance with your instructions, we have made an appraisal of the fair market value of International Payment Solutions Holdings Limited (the “Target Company”). Universal Cyberworks International Ltd. (the “Vendor”), a wholly-owned subsidiary of Universal Technologies Holdings Limited (the “Company”) which is incorporated in the British Virgin Islands (“BVI”) with limited liability, is contemplating to dispose of a 51% equity interest in the business enterprise of the Target Company to Brilliant Dragon Investment Limited (the “Purchaser”), a company incorporated in the BVI with limited liability, holding 49% equity interest of the Target Company. The Target Company is an investment holding company incorporated in Hong Kong and effectively controls and enjoys the economic benefits of Universal eCommerce China Limited and its subsidiaries (the “VIE Group”) via a contractual arrangement. The Target Company and its subsidiaries including the VIE Group are principally engaged in the payment solutions business in the PRC.

This letter identifies the asset appraised, describes the basis of valuation and assumptions, explains the valuation methodology utilized and presents our conclusion of value.

Fair market value is defined as the estimated amount at which a property might be expected to exchange between a willing buyer and a willing seller, neither being under compulsion, each having reasonable knowledge of all relevant facts, and with the buyer and seller contemplating retention of the business at its present location for continuation of current operations unless the break-up of the business or the sale of its assets would yield greater investment returns.

– IV-1 –

APPENDIX IV

VALUATION REPORT ON THE TARGET GROUP

Business enterprise value is defined for this appraisal as the combination of all tangible assets (land, buildings, machinery and equipment), long term investment, net working capital and intangible assets of a continuing business. Alternatively, the business enterprise value is equivalent to the investment capital of the business, that is, the combination of the value of shareholder’s equity and long-term debt.

The purpose of this appraisal is to express an independent opinion of the fair market value of the Target Company as of 30 June 2016 (the “Appraisal Date”). It is our understanding that this appraisal will be used by the Company for disposal purposes and our report will be incorporated in a circular to be issued to the shareholders of the Company.

INTRODUCTION

The Company

The Company is an investment holding company incorporated in the Cayman Islands with limited liability and its shares are listed on the main board of the stock exchange of Hong Kong (stock code: 1026). The Company and its subsidiaries (collectively referred to as the “Group”) is principally engaged in investment holding, provision of payment solutions and related services, timber trading and furniture manufacturing, system integration and technical platform services, property investment, building management and water supply and related services.

The Target Group

The Target Company is an investment holding company incorporated in Hong Kong with limited liability. The Target Company, its subsidiaries and associate companies and members (the “Target Group”) (including the VIE Group which is effectively controlled through the VIE structure), are principally engaged in the payment solutions business in the PRC. As at the latest practicable date of this circular (the “Latest Practicable Date”), the Target Company is owned as to 51% by the Vendor and as to 49% by the Purchaser.

On 11 August 2016, the People’s Bank of China published the results of renewal of the first batch of payment business licenses. The payment license held by the Target Group was renewed for five years until 2 May 2021, covering four permitted payment gateways, namely: (a) internet payment; (b) mobile phone payment; (c) fixed line telephone payment; and (d) bank card acceptance (principally permitting payment through physical point-of-sale (POS) terminals at retail shops). While the scope of permitted business under the three former means of payment remains intact after the renewal, the permitted scope of bank card acceptance business was restricted from nationwide (before the renewal) to four specified provinces and one specified city (after the renewal).

INDUSTRY OVERVIEW

The third party online payment market in the PRC has been surging in past few years. According to iResearch, a leading internet market research institution in the PRC, the gross merchandise value (“GMV”) of third-party online payment services in the PRC increased from approximately RMB2.2 trillion in 2011 to approximately RMB11.9 trillion in 2015.

– IV-2 –

APPENDIX IV

VALUATION REPORT ON THE TARGET GROUP

iResearch also estimates that the GMV of the third-party online payment services in the PRC will increase to approximately RMB26.9 trillion in 2019. However, the third-party online payment market in the PRC is an oligopoly market which is dominated by Alipay（支付寶）, Tenpay （財付通）and Yspay （銀商）. These three top players took up, in aggregate, approximately 78.4% of the total market share of the PRC in 2015. The competition among the third-party online payment companies was increasingly fierce. Consequently, the market share of the Target Group in 2015 has also shrinked to approximately 1.2% only, as compared to approximately 2.7% in 2014.

In recent three years, the market acceptance of mobile payment gives greater flexibility for consumers to pay via mobile and less reliance on settling payment via traditional PC. According to the figures released by iResearch, the GMV of the third-party mobile payment services in the PRC skyrocketed at a CAGR of approximately 235.8% from approximately RMB80 billion in 2011 to approximately RMB10,171 billion in 2015. It is expected that the GMV of the third party mobile payment services in the PRC will reach approximately RMB21,930 billion in 2017 and will, at the first time, exceed the GMV of the third party online payment services.

As indicated by iResearch, the market share in China’s third-party mobile payment GMV in first quarter of 2016, Alipay（支付寶）accounted for 51.8%, Tenpay（財付通）38.3%, Lakala（拉卡拉）1.4%, Umpay（聯動支付）1.3%, Lianlian Pay（連連支付）1.3%, Ping’an Pay （平安一賬通）1.2%, 99Bill（快錢）0.9%, Yeepay（易寶支付）0.9%, JD Pay（京東錢包）0.9%, Best Pay（翼支付）0.4%, Baidu Wallet（百度錢包）0.4% and Yifubao（易付寶）0.3%. On top of these existing market players, Apple Pay（蘋果支付）, Samsung Pay（三星支付）, Xiaomi’s Mi Pay（小米支付）and Huawei Pay（華為支付）have also stepped into these lucrative market. Many of these players have their own competitive advantage. Some of them have strong social networking platform, some have strong B2B or B2C platform, whereas some are strong in their mobile handset ecosystem. It is expected that new entrants or existing players in third-party online or mobile payment without unique competitive edge is difficult to survive in upcoming fierce competition.

BASIS OF VALUATION AND ASSUMPTIONS

We have appraised the business enterprise of the Target Company on the basis of fair market value. Fair market value is defined as the estimated amount at which the business enterprise might be expected to exchange between a willing buyer and a willing seller, neither being under compulsion, each having reasonable knowledge of all relevant facts, and with the buyer and seller contemplating retention of the business at its present location for continuation of current operations unless the break-up of the business or the sale of its assets would yield greater investment returns. Business enterprise value is defined for this appraisal as shareholders’ equity plus shareholders’ loans.

Our investigation included discussions with the management of the Company (the “Management”) in relation to the history, operations and prospects of the Target Company. We also studied the current condition of the market and reviewed the financial information prepared by the Management, as well as a review of other relevant documents. We assumed

– IV-3 –

VALUATION REPORT ON THE TARGET GROUP

APPENDIX IV

that the data we obtained in the course of the valuation, along with the opinions and representations provided to us by the Target Company are true and accurate. Before arriving at our opinion of value, we have considered the following principal factors:

the nature of the Target Group from its inception;
the financial condition of the Target Group;
the specific economic and competitive elements affecting the Target Group, its industry and its markets;
Management’s policies and strategies for the future;
Past operating results of the Target Group;
Existence of assets of an intangible nature;
Investment market’s attitude toward securities with similar characteristics, as measured by market performance, and alternative investment opportunities available to an investor;
The property valuation report prepared by our Real Estate Group dated 31 October 2016 regarding the property interests held by the Target Group as at the Appraisal Date (the “Property Valuation Report”);
the nature and prospect of the online payment sector in mainland China;
the market-derived investment returns of entities engaged in a similar line of business; and
the business risks of the Target Group.

Due to the changing environment in which the Target Company is operating, a number of assumptions have to be established in order to sufficiently support our concluded value of the business enterprise. The major assumptions adopted in this appraisal are:

There will be no major changes in the existing political, legal, and economic conditions in the territories in which the Target Group will carry on its business;
There will be no major changes in the current taxation law in mainland China, Hong Kong and the territories the Target Group conducts its business, that the rates of tax payable remain unchanged and that all applicable laws and regulations will be complied with;
Exchange rates and interest rates will not differ materially from those presently prevailing;

– IV-4 –

APPENDIX IV

VALUATION REPORT ON THE TARGET GROUP

There are no material unrecorded and/or contingent liabilities in the Target Group as at the Appraisal Date;
The Target Group will utilize and maintain its current operational, administrative and technical facilities to sustain its business;

– The Target Group will retain and have competent management, key personnel, and technical staff to implement its business plan and to support its ongoing operation; and

Industry trends and market conditions for the related industries will not deviate significantly from current economic forecasts.

We were furnished, for the purpose of this appraisal, with unaudited financial data as well as other records, documents and projections. We have reviewed and examined the financial information and have no reason to doubt the truth and accuracy of the information contained therein. We have also consulted public sources of financial and business information to supplement the information provided by the Management. In arriving at our opinion of value, we have relied to a very considerable extent on the above-mentioned information and discussions held with the Management and other representatives from the Target Company.

VALUATION METHODOLOGY

To develop our opinion of value of the Target Group, we considered the three generally accepted approaches to value: the asset-based approach, market approach and income approach.

Selection of Valuation Approach

In any appraisal study, all three approaches to value must be considered, as one or more may be applicable to the subject asset. For this appraisal, the Target Group incurred substantial losses for the last twelve months ended 30 June 2016. Moreover, after discussion with the Management, it is our understanding that the intense competition and continuous deterioration of the business environment facing the Target Group will not change. On this basis, we consider that the income approach and market approach are not considered to be appropriate for this valuation since there are great uncertainty exist in the Target Group’s profitability in the near future. Also, since market transactions of comparable asset (i.e. online payment gateway business through a VIE structure) are not available, when data cannot be extrapolated from larger transactions, or when transactions are non-existent, the market approach was not used. Therefore, the asset-based approach is considered to be appropriate and the fair market value of the Target Group has been developed through the application of the Adjusted Net Asset Value (NAV) Method.

– IV-5 –

VALUATION REPORT ON THE TARGET GROUP

APPENDIX IV

Adjusted NAV Method

The Adjusted NAV Method calls for a summation of the fair market values of all assets belonging to an entity and a reduction of that aggregate by the fair market values of that entity’s total liabilities. The fair market value is represented by the book value of total assets net of liabilities owed to any person other than the beneficial owners of the subject company, after adjusting for any necessary discounts or premiums to the book values of the assets and liabilities to reflect their market values.

In this appraisal, the fair market value of business enterprise using the Adjusted NAV Method can be developed with the following formula:

NAV per unaudited financial statements Add: Revaluation surplus (deficit) of interests in fixed assets Adjusted NAV/Fair market value

Where the revaluation surplus (deficit) is the difference between the fair market value of interests in fixed assets as per the Property Valuation Report and their respective carrying amount

To formulate our opinion of value of its business enterprise of the Target Group, we have relied upon the market values of the property interests and machinery and equipment held by the Target Group and the book values of its remaining assets and liabilities as at the Appraisal Date. The following table summarizes the carrying values of the Target Group’s major assets and liabilities and its fair market business enterprise value as at the Appraisal Date:

– IV-6 –

VALUATION REPORT ON THE TARGET GROUP

APPENDIX IV

Fair Market Value with Adoption of Adjusted NAV Method as at 30 June 2016:

Non-current Assets # Property, plant and equipment # Prepaid land lease premium # Investment properties Intangible assets Goodwill Interest in associate Deferred tax assets Prepayments and Other receivables Deposit paid for acquisition of PPE Current Assets Cash and bank balances Inventories Accounts receivable Financial assets at fair value through profit or loss Prepaid land lease premium Deposits, prepayment and other receivables Secured loans receivables Unsecured loan receivables Amount due from Remaining Group (HK) Current Liabilities Bank loans and overdrafts Payables to merchants Tax payable Deposits received, sundry creditors and accruals Amount due to Remaining Group (HK) Net Current Assets/(Liabilities) Non-current Liabilities Deferred tax liability Net Asset Value (Before Deduction of Non-controlling Interest) Less: Non-controlling Interest Net Asset Value (After Deduction of Non-controlling Interest) Fair Market Value of 51% Equity Interest in Target Company		HK$ 258,152,000 20,643,000 10,217,000 56,113,000 3,895,000 77,097,000 28,869,000 197,000 38,255,000 22,866,000 796,642,000 454,839,000 636,000 82,056,000 2,018,000 177,000 29,842,000 54,291,000 111,507,000 61,276,000 802,213,000 63,120,000 507,030,000 7,138,000 116,242,000 108,683,000 (5,571,000) 1,443,000 251,138,000 57,036,000 194,102,000 98,992,000

Remarks: # Adjusted value with supporting figures from separate Property Valuation Report prepared by our Real Estate Group

– IV-7 –

VALUATION REPORT ON THE TARGET GROUP

APPENDIX IV

Property Interests

As at the Appraisal Date, the market values of the property interests is adopted from the Property Valuation Report. The property interests concerned is appraised on the basis that the properties will be developed and completed in accordance with the latest development proposals and that all necessary approvals for the proposals are assumed to have been obtained. The valuation method adopted is the direct comparison approach by making reference to comparable sales evidences as available in the relevant market or the recent transactions for similar premises in the proximity and the expended construction costs and the construction costs that will be expended to complete the developments to reflect the quality of the completed developments of the subject property interests.

Remaining Assets and Liabilities

Based on our discussion with the Management, all the remaining assets registered on the account of the Target Group are in good condition. Based on the normal operation of the Target Group, we reasonably assume that the tangible assets of the Target Group are properly describing the tangible assets. With reference to our discussion with the Management, the balances of debtors, deposits, other receivables and prepayments are considered fully recoverable. Hence, in this appraisal, we assume that the net book values of its assets and liabilities should reasonably represent their fair market values as at the Appraisal Date.

CONCLUSION OF VALUE

Based upon the investigation and analysis outlined above and on the appraisal method employed, it is our opinion that as of 30 June 2016, the fair market value of the Target Company is reasonably stated by the amount of HONG KONG DOLLARS NINETY-EIGHT MILLION NINE HUNDRED AND NINETY-TWO THOUSAND (HKD98,992,000) ONLY.

This conclusion of value was derived in accordance with the generally accepted valuation procedures and practices that rely extensively on the use of numerous assumptions and the consideration of many uncertainties, not all of which can be easily quantified or ascertained.

We have not investigated the title to or any liabilities against the property appraised.

– IV-8 –

VALUATION REPORT ON THE TARGET GROUP

APPENDIX IV

We hereby certify that we have neither present nor prospective interests in the securities of the Company or the value reported.

Respectfully submitted, For and on behalf of GRAVAL CONSULTING LIMITED Kelvin C.H. Chan, FCCA, CFA Chairman

Note: Mr. Kelvin C.H. Chan is a CFA Charterholder and a fellow member of the Association of Chartered Certified Accountants. He has been working in the financial industry since 1996, with experiences covering the area of corporate banking, equity analysis and business valuation. Mr. Chan has followed and adopted appropriate guidelines and rules in their respective professional associations as mentioned above.

– IV-9 –

GENERAL INFORMATION

APPENDIX V

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTEREST

(a) Interests and short positions of the Directors and Chief Executive in the Shares, underlying shares and debentures

As at the Latest Practicable Date, the interests or short positions of the Directors and chief executives of the Company or their associates in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they have taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) have to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) to be notified to the Company and the Stock Exchange, were as follows:–

Name of Directors
Executive Directors:
Mr. Chen Jinyang
(note 1)
Mr. Chau Cheuk Wah
(note 1)
Mr. Zhou Jianhui
(note 1)
Ms. Zhu Fenglian
Non-Executive
Director:
Ms. Zhang Haimei
Independent
Non-Executive
Directors:
Dr. Cheung Wai Bun,
Charles, J.P.
Mr. David Tsoi
Mr. Chao Pao Shu
George

Interests in ordinary shares
Total
interests in
ordinary
shares
Total
interests in
underlying
shares
Aggregate
interests
% of the
Company’s
issued share
Personal
interests
Family
interests
Corporate
interests
–
–
–
–
20,000,000
20,000,000
0.94%
–
–
–
–
20,000,000
20,000,000
0.94%
6,000,000
–
–
6,000,000
20,000,000
26,000,000
1.23%
–
520,380,000
–
520,380,000
–
520,380,000
24.54%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

– V-1 –

GENERAL INFORMATION

APPENDIX V

Notes:

The interests of Mr. Chen Jinyang, Mr. Chau Cheuk Wah and Mr. Zhou Jianhui in underlying shares of the Company represent the interests in share options granted to them under the share option scheme of the Company.
Ms. Zhu Fenglian is the spouse of Mr. Yang Zhimao (“ Mr. Yang ”) and is deemed to be interested in the 520,380,000 shares attributable to Mr. Yang and his controlled corporation, Ever City Industrial Development Limited (“ Ever City ”). For more details on the deemed interest of Mr. Yang and Ever City, please refer to Note 1 to the section headed “Notifiable interests and short positions of substantial shareholders and other persons in the Shares, underlying shares and debentures” below.
There were no debt securities nor debentures issued by the Group as at the Latest Practicable Date.

Save as disclosed above, so far as the Directors were aware as at the Latest Practicable Date, none of the Directors or chief executives of the Company or their associates had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they have taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) have to be notified to the Company and the Stock Exchange pursuant to the Model Code.

(b) Notifiable interests and short positions of substantial shareholders and other persons in the Shares, underlying shares and debentures

So far as the Directors are aware, as at the Latest Practicable Date, persons who have an interest or a short position in the shares or underlying shares of the Company

– V-2 –

GENERAL INFORMATION

APPENDIX V

which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO were as follows:

			Approximate
		Number	percentage
Name	Type of interests	of shares	of interests
Ever City Industrial	Beneficial owner and	520,380,000	24.54%
Development Limited	interest in controlled
(Notes 1 & 3)	corporation
Mr. Yang Zhimao and Ms.	Interest in controlled	520,380,000	24.54%
Zhu Fenglian (Note 1)	corporation/ Family
	Interests
Eastcorp International	Beneficial owner	200,000,000	9.43%
Limited (Notes 1 & 3)
Ng Tin Shui	Beneficial owner	240,000,000	11.32%
Tang Wing Hung (Note 2)	Interest in controlled	160,440,000	7.57%
	corporation
Passion Ease Limited	Beneficial owner	160,440,000	7.57%
(Notes 2 & 3)
Ho Shui Chee	Beneficial owner	149,170,000	7.03%

Notes:

Ms. Zhu Fenglian is the spouse of Mr. Yang. Mr. Yang and Ever City are deemed to be interested in 520,380,000 shares, comprising (a) 320,380,000 shares directly held by Ever City; and (b) 200,000,000 shares held by Eastcorp International Limited (“ Eastcorp ”). Ever City is beneficially owned as to 80% by Mr. Yang and 20% by Ms. Zhu Fenglian, and is therefore regarded as a controlled corporation of Mr. Yang. Eastcorp is wholly and beneficially owned by Ever City and is therefore regarded as a controlled corporation of both Ever City and Mr. Yang.
These 160,440,000 shares are held by Passion Ease Limited, which is in turn 100% owned by Tang Wing Hung. Tang Wing Hung is deemed to be interested in the entire shareholding held by his controlled corporation, Passion Ease Limited.
Save and except for Ms. Zhu Fenglian, who is a Director of the Company and a director of Ever City, none of the Director or proposed Director is a director or employee of Ever City, Eastcorp and Passion Ease Limited.

Save as disclosed above, so far as the Directors were aware, as at the Latest Practicable Date, there were no other persons who have an interest or a short position in the shares or underlying shares of the Company which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with any member of the Group (excluding contracts expiring or determinable by the Company or any of its subsidiaries within one year without payment of compensation, other than statutory compensation).

– V-3 –

GENERAL INFORMATION

APPENDIX V

4. INTEREST IN CONTRACT OR ARRANGEMENT

On 20 September 2016, Universal Technologies Capital Holdings Limited (the “ Purchaser ”), a direct wholly-owned subsidiary of the Company, and Ever City Industrial development Limited (the “ Vendor ”), entered into an acquisition agreement pursuant to which the Purchaser conditionally agreed to acquire from the Vendor, and the Vendor agreed to sell, the entire issued share capital of Hooray Asset Management Limited for a total cash consideration of HK$9,000,000 (the “ Hooray Acquisition ”). The issued share capital of the Vendor is 20% owned by Ms. Zhu Fenglian, an executive Director of the Company, and 80% owned by Mr. Yang Zhimao (the spouse of Ms. Zhu Fenglian). In addition, the Vendor is a substantial shareholder of the Company interested in, directly and indirectly through its subsidiary, 520,380,000 Shares, representing 24.54% of the issued share capital of the Company. As at the Latest Practicable Date, the Hooray Acquisition has not yet completed.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors was materially interested in any subsisting contract or arrangement which was significant in relation to the business of the Group.

5. INTEREST IN ASSETS

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any asset acquired or disposed of by or leased to any member of the Group or was proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2015, being the date to which the latest published audited accounts of the Company were made up.

6. COMPETING INTEREST

As at the Latest Practicable Date, none of the Directors had any business or interest that competes or may compete with the business of the Group and had any other conflict of interest with the Group.

7. MATERIAL LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation, claim or arbitration of material importance and there was no litigation, claim or arbitration of material importance known to the Directors to be pending or threatened against any member of the Group.

8. MATERIAL CONTRACTS

The following material contracts (not being contracts in the ordinary course of business) have been entered into by members of the Group within the two years preceding the date of this circular and up to the Latest Practicable Date and are or may be material:–

(i) the Previous Disposal Agreement entered into between the Vendor (as vendor) and H&R (as purchaser) dated 29 October 2014 in relation to the disposal of certain shares of subsidiaries of the Vendor for a cash consideration of HK$315,480,000

– V-4 –

GENERAL INFORMATION

APPENDIX V

and subject to other terms and conditions of the Previous Disposal Agreement, details of which were disclosed in the circular of the Company dated 27 November 2014;

(ii) the equity transfer agreement entered into between Shenzhen Huanye Universal Technologies Limited (“ Shenzhen Huanye ”), an indirect wholly-owned subsidiary of the Company, and Dongguan Hongshun Shiye Development Company Limited (“ Dongguan Hongshun ”) dated 21 June 2015 pursuant to which Shenzhen Huanye has conditionally agreed to acquire, and Dongguan Hongshun has conditionally agreed to sell, 49% of the entire equity interest in Qinghui Properties Ltd., at a total consideration of RMB224,420,000 (the “ Acquisition ”);
(iii) the supplemental agreement entered into between Shenzhen Huanye and Dongguan Hongshun dated 28 October 2015 in relation to the Acquisition;
(iv) the acquisition agreement dated 20 September 2016 and entered into between (a) Universal Technologies Capital Holdings Limited (as purchaser), a wholly-owned subsidiary of the Company; and (b) Ever City Industrial Development Limited (as vendor), a substantial shareholder of the Company and a company owned as to 20% by Ms. Zhu Fenglian (an executive Director of the Company) and as to 80% owned by Mr. Yang Zhimao (the spouse of Ms. Zhu Fenglian), in relation to the proposed acquisition of the entire issued share capital of Hooray Asset Management Limited (as target company) at a consideration of HK$9,000,000; and
(v) the Sale and Purchase Agreement.

9. QUALIFICATION AND CONSENT OF EXPERTS

The following are the qualification of the experts who have given opinions or advices contained in this circular:–

Name Qualification PKF Certified Public Accountant Graval Consulting Limited Independent valuer

Each of the experts named above has given and confirmed that it has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter, report, valuation certificate, advice, opinion and/or references to its name, in the form and context in which they respectively appear.

As at the Latest Practicable Date, each of the experts named above was not beneficially interested in the share capital of any member of the Group nor did it have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for any Shares, convertible securities, warrants, options or derivatives which carry voting rights in any member of the Group nor did it have any interests, either direct or indirect, in any

– V-5 –

GENERAL INFORMATION

APPENDIX V

assets which have been, since the date to which the latest published audited consolidated financial statements of the Company were made up (i.e. 31 December 2015), acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

10. MISCELLANEOUS

(i) The company secretary of the Company is Mr. Tang Chi Wai. Mr. Tang is also a financial controller and authorised representative of the Company. He is a fellow member of the Hong Kong Institute of Certified Public Accountants, the Association of Chartered Certified Accountants, the Hong Kong Institute of Chartered Secretaries and the Institute of Chartered Secretaries and Administrators, and a member of the Chinese Institute of Certified Public Accountants.
(ii) The Company’s registered office is at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands.
(iii) The Company’s principal place of business in Hong Kong is at Room A & B2, 11th Floor, Guangdong Investment Tower, No. 148 Connaught Road Central, Sheung Wan, Hong Kong.
(iv) The principal share registrar and transfer office of the Company is Royal Bank of Canada Trust Company (Cayman) Limited, whose registered office is at 4th Floor, Royal Bank House, 24 Shedden Road, George Town, Grand Cayman KY1-1110, Cayman Islands, and the Hong Kong branch share registrar and transfer office of the Company is Hong Kong Registrars Limited, whose registered office is at Room 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.
(v) In the event of inconsistency, the English language text of this circular shall prevail over the Chinese language text.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours at the principal place of business of the Company in Hong Kong at Room A & B2, 11th Floor, Guangdong Investment Tower, No. 148 Connaught Road Central, Sheung Wan, Hong Kong from the date of this circular up to and including the date of the EGM:

(i) the memorandum and articles of association of the Company;
(ii) the annual reports of the Company for the three years ended 31 December 2013, 2014 and 2015;
(iii) the interim report of the Company for the six months ended 30 June 2016;

– V-6 –

GENERAL INFORMATION

APPENDIX V

(iv) the letter from the Board, the text of which is set out on pages 6 to 18 of this circular;
(v) the assurance report on the compilation of the unaudited pro forma financial information of the Remaining Group issued by PKF, the text of which is set out in Appendix III to this circular;
(vi) the valuation report issued by the Independent Valuer dated 30 November 2016 in relation to the Valuation, the text of which is set out in Appendix IV to this circular;
(vii) the material contracts referred to in the paragraph headed “8. Material Contracts” in this appendix, including the Agreement;
(viii) the written consents referred to in the paragraph headed “9. Qualification and consent of experts” in this appendix; and
(ix) this circular.

– V-7 –

NOTICE OF EGM

UNIVERSAL TECHNOLOGIES HOLDINGS LIMITED 環球實業科技控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1026)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “ EGM ”) of Universal Technologies Holdings Limited (the “ Company ”) will be held at Room A & B2, 11th Floor, Guangdong Investment Tower, No. 148 Connaught Road Central, Sheung Wan, Hong Kong on Friday, 16 December 2016 at 11:00 a.m. for the purpose of considering and, if thought fit, passing (with or without modifications) the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT the conditional sale and purchase agreement (the “ Sale and Purchase Agreement ”, a copy of which has been produced to the meeting marked “A” and signed by the chairman of the meeting for the purpose of identification) dated 2 November 2016 entered into between Universal Cyberworks International Ltd. (a wholly-owned subsidiary of the Company) (as vendor) and Brilliant Dragon Investment Limited (as purchaser) in relation to the sale and purchase of 51% of the issued share capital of International Payment Solutions Holdings Limited and the simultaneous assignment of the Net Shareholders Loans (as defined in the circular of the Company dated 30 November 2016) in accordance with the terms and conditions of the Sale and Purchase Agreement, and the transactions contemplated thereunder, be and are hereby approved, confirmed, and ratified and that the directors of the Company (the “ Directors ”) be and are hereby authorized to execute all such documents, instruments, agreements and deeds and do all such acts, matters and things as they may consider necessary, desirable or expedient for the purposes of or in connection with implementing, completing and giving effect to the Sale and Purchase Agreement and the transactions contemplated thereunder, and to agree to such variations, amendments or waiver of any such documents which are, in the opinion of the Directors, in the interest of the Company and its shareholders as a whole.”

By order of the Board UNIVERSAL TECHNOLOGIES HOLDINGS LIMITED Chen Jinyang Chairman

Hong Kong, 30 November 2016

– EGM-1 –

NOTICE OF EGM

Registered Office: Cricket Square Hutchins Drive, P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Head office and principal place in Hong Kong: Room A & B2, 11th Floor Guangdong Investment Tower No. 148 Connaught Road Central Sheung Wan, Hong Kong

Notes:

Any member entitled to attend and vote at the EGM is entitled to appoint another person as his/her proxy to attend and vote instead of him/her. A member who is the holder of two or more shares of the Company may appoint one or more proxies to attend and vote instead of him/her.
A proxy form for use at the EGM is enclosed in the circular of the Company of the same date of this notice. The proxy form must be signed by you or your attorney duly authorised in writing or, in the case of a corporation, must be under its seal or the hand of an officer, attorney or the person duly authorised.
To be valid, this completed and signed proxy form and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy thereof, must be lodged at Hong Kong Registrars Limited, the Company’s branch share register and transfer office in Hong Kong, whose address is 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not less than 48 hours before the time for holding of the EGM or any adjournment thereof (as the case may be).
Where there are joint holders of any Shares, any one of such persons may vote at the EGM either personally, or by proxy, in respect of such Shares as if he were solely entitled thereto, and if more than one of such joint holders are present at the EGM personally or by proxy, the joint holder whose name stands first at the register of members of the Company in respect of the relevant joint holding shall alone be entitled to vote.
Completion and return of the proxy form will not preclude members from attending and voting in person at the meeting or at any adjourned meeting thereof (as the case may be) should they so wish, and in such event, the proxy form shall be deemed to be revoked.

As at the date of this notice, the Board of Directors of the Company comprises four executive Directors namely Mr. Chen Jinyang (Chairman), Mr. Chau Cheuk Wah (Chief Executive Officer), Mr. Zhou Jianhui and Ms. Zhu Fenglian; one non-executive Director namely Ms. Zhang Haimei; and three independent non-executive Directors namely Dr. Cheung Wai Bun, Charles, J.P., Mr. David Tsoi and Mr. Chao Pao Shu George.

– EGM-2 –

AI assistant

Universal Technologies Holdings Limited — Proxy Solicitation & Information Statement 2016

49633_rns_2016-11-29_cda2d97e-2555-464d-acaf-aa9c3db6ba42.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

UNIVERSAL TECHNOLOGIES HOLDINGS LIMITED 環球實業科技控股有限公司

AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

Financial Adviser to the Company

CONTENT

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

UNIVERSAL TECHNOLOGIES HOLDINGS LIMITED 環球實業科技控股有限公司

EXEMPTED CONNECTED TRANSACTION AND

VERY SUBSTANTIAL DISPOSAL IN RELATION TO THE DISPOSAL OF 51% OF THE ISSUED SHARE CAPITAL OF INTERNATIONAL PAYMENT SOLUTIONS HOLDINGS LIMITED

INTRODUCTION

THE SALE AND PURCHASE AGREEMENT

Assets to be disposed of

Consideration

LETTER FROM THE BOARD

LETTER FROM THE BOARD

VIE Tax Indemnity

Condition Precedent

Completion

INFORMATION OF THE TARGET GROUP

LETTER FROM THE BOARD

Financial information of the Target Group

INFORMATION OF THE NET SHAREHOLDERS LOANS

INFORMATION OF THE VENDOR

INFORMATION OF THE PURCHASER

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE DISPOSAL

LETTER FROM THE BOARD

LETTER FROM THE BOARD

FINANCIAL EFFECT OF THE DISPOSAL

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

LETTER FROM THE BOARD

EGM

RECOMMENDATION

WARNING OF THE RISKS OF DEALINGS IN THE SHARES

ADDITIONAL INFORMATION

1. FINANCIAL INFORMATION OF THE GROUP

2. INDEBTEDNESS STATEMENT

3. SUFFICIENCY OF WORKING CAPITAL

4. MATERIAL ADVERSE CHANGE

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

The Water Supply Business

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The Other Businesses

6. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

For the six months ended 30 June 2016 (“PE2016”)

1. Business and financial review

2. Business prospect

3. Cash and bank balances and fixed deposits

4. Pledged time deposit

5. Bank and other borrowings

6. Liquidity and financial resources

APPENDIX I

7. Employees

8. Significant investments, acquisitions and disposals

9. Charges on the Remaining Group’s assets

10. Details of future plans for material investments or capital assets

11. Currency risk

12. Capital Commitment

APPENDIX I

13. Contingent Liabilities

For the year ended 31 December 2015 (“FY2015”)

1. Business and financial review

2. Business prospect

3. Cash and bank balances and fixed deposits

4. Pledged time deposit

5. Bank and other borrowings

6. Liquidity and financial resources

7. Employees

APPENDIX I

8. Significant investments, acquisitions and disposals

Universal Technologies Holdings Limited Proxy Solicitation & Information Statement 2016